Last week we saw a significant increase in… Bitcoin (BTC), followed by a sideways movement that has lasted for several days. This so-called “consolidation” could be the result of significant outflows that Bitcoin ETFs have experienced over the past two days. Especially yesterday, the net outflow was large, caused by Grayscale’s GBTC fund.
Bitcoin “Consolidation” Possibly Caused by Grayscale ETF
Currently, Bitcoin has stabilized well at around $62,000. Although a further increase would of course be positive, this is also desirable behavior the rate. This current price can serve as a support level for further developments. Going forward, this level could prevent sharp declines like we saw when the price approached $64,000.
One possible reason for the consolidation is the outflows that Bitcoin ETFs have seen in the last two days. While the fund received an inflow of $673 million on February 28, the following day it was only $92 million. Yesterday, March 1, 2024, there was even an outflow: up to $140 million left the market.
This drain is mainly caused by Grayscale’s ETF, the GBTC fund. This ETF has been struggling with departing customers for weeks. This is because Grayscale’s fund was previously on the market in a different guise. At that time they managed tens of billions of dollars. When several Bitcoin ETFs were approved on January 10, the renamed GBTC fund turned out to be one of the most expensive.
Bitcoin ETFs are driving up the price
This was one of the reasons BlackRock’s Bitcoin ETF, called IBIT, grew so quickly. Grayscale customers opted for cheaper alternatives, including BlackRock. As a result, Grayscale’s outflow was not reflected in the net outflow as it was “redistributed” between the ETFs.
However, yesterday the net outflow was still negative. For example, some of Grayscale’s outflow went to BlackRock, but some did not. As a result, the ETFs lost $140 million yesterday. Some experts see this as a possible reason for the consolidation in the last two days.
It turned out that the ETFs were one have a very strong influence on the price. Since the funds were approved, the price of Bitcoin has increased by more than 50%. Furthermore, a large inflow is often accompanied by an increase, while a large outflow is often accompanied by a decrease. Nevertheless, the crypto world is very unpredictable and it remains to be seen how the Bitcoin price will develop further.
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