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Bitcoin faced a notable price drop amid ongoing outflows from Grayscale’s converted GBTC spot Bitcoin ETF.
As per data from CoinMarketCap, the leading cryptocurrency fell to a low of $60,800 on Tuesday, representing a 17% decrease from its peak value.
This decline in Bitcoin’s price followed a substantial outflow of $643 million from the $25 billion Grayscale Bitcoin Trust (GBTC) on Monday, marking the largest outflow since it transitioned into an ETF on January 11.
On Tuesday, these products experienced an additional $326.2 million in net outflows.
Specifically, Grayscale’s GBTC saw an outflow of $443 million.
In contrast, ETF offerings from BlackRock and Fidelity recorded modest inflows of $75.2 million and $39.6 million, respectively.
On March 19, the total net outflow of Bitcoin spot ETF was US$326 million, with net outflows persisting for two days. Grayscale ETF GBTC had a single-day net outflow of US$443 million. The Bitcoin spot ETF with the largest single-day net inflow yesterday was BlackRock ETF IBIT, with a… pic.twitter.com/jkk3swoF7E
— Wu Blockchain (@WuBlockchain) March 20, 2024
Over $650 Million Liquidated as Bitcoin Remains Volatile
According to data from CoinGlass, long and short traders incurred losses exceeding $650 million across major centralized exchanges in the last 24 hours.
Specifically, 189,935 traders were liquidated, with total long liquidations amounting to $491 million and short liquidations around $165 million.
The crypto exchange OKX accounted for the majority of these liquidations at over $271 million, followed by Binance at $229 million and Bybit at approximately $104 million.
Futures linked to Bitcoin experienced $229 million in both short and long liquidations over the past day, while Ethereum-related futures saw liquidations exceeding $157 million.
Previously, spot Bitcoin ETFs had been setting records, propelling Bitcoin’s price to new all-time highs.
However, the recent outflows indicate a shift in investor sentiment and a more cautious stance.
One possible factor affecting investor behavior is the upcoming decision by the Federal Reserve, set to be announced on Wednesday.
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While the consensus anticipates no change in the benchmark interest rate at this time, concerns remain regarding future rate cuts, particularly if persistent inflation continues.
This situation may not be favorable for Bitcoin bulls, prompting investors to take a wait-and-see approach.
Grayscale to Drop Fees Overtime
Grayscale intends to gradually lower fees on its flagship product as outflows surge to $12 billion.
According to Grayscale CEO Michael Sonnenshein, the cryptocurrency fund manager expects fee reductions for the Grayscale Bitcoin Trust ETF in the upcoming months as the crypto ETF market develops.
Sonnenshein confirmed in an interview with CNBC that as the market progresses, fees for GBTC will be reduced.
Grayscale had previously justified its above-average fees, stating that charges tend to be higher for new products during their initial phases.
Sonnenshein anticipates a similar pattern for GBTC, with fees decreasing as the fund expands and the market evolves.
Since its conversion into an ETF in early January, GBTC has seen outflows surpassing $12 billion.
Sonnenshein acknowledged that outflows were anticipated as investors aimed to realize profits, arbitragers exited the fund, and individuals unwound positions related to bankruptcies and forced liquidations.
Industry analysts suggest that the insolvency of cryptocurrency giant FTX has significantly contributed to the GBTC sell-off.
FTX, a major holder of GBTC, filed for bankruptcy in November 2022, and the FTX bankruptcy estate reportedly liquidated most of its shares in Grayscale’s bitcoin ETF.
“We’re kind of at the end of that first inning now, where the pent-up demand for buying has hopefully been satisfied, the pent-up demand for selling has also hopefully been satisfied,” Sonnenshein added.
“And now we’re kind of starting to move towards that second and third inning, where there’s so much more of the market that still is not yet accessing these products.”
The post GBTC Bleeds Another $443 Million as Bitcoin Price Drops Below $61,000 appeared first on Cryptonews.
