Bitcoin bulls are finding reason to rejoice as the largest exchange-traded funds (ETFs) have halted their outflows. This recent shift in market dynamics has sparked intrigue and speculation within the crypto community as enthusiasts and investors eagerly analyze the potential implications for Bitcoin (BTC).
Bitcoin’s weekend performance
As of this writing, the current value of BTC stands at $39,957.51, reflecting a decrease of 0.2% from one hour ago and a further 0.2% decline since yesterday. BTC is currently worth 3.6% less than it did seven days ago. The aggregate traded volume of Bitcoin over the last twenty-four hours was $17,833,328,757.
Presently, the global market cap of cryptocurrencies stands at $1.63 trillion, reflecting a change of -0.12% over the last twenty-four hours and 49.91% over the past year. The current market cap of BTC is $782 billion, which signifies a 48.1% market share for Bitcoin. In contrast, Stablecoins have an 8.36% market capitalization share of the total crypto market capitalization at $136 billion.
Bitcoin remained stable around $40,000 on the morning Asian market due to a deceleration in outflows from the $20 billion Grayscale Bitcoin Trust, which strategists believe could help to halt the token’s two-week decline.
Bloomberg reports that approximately $4.8 billion has left the largest Bitcoin portfolio in the world since it became an exchange-traded fund on January 11, a portfolio that has been in existence for over a decade. Approximately 20% of BTC has been lost during the same time frame.
The conversion of the fund from a closed-end format to an open-ended format facilitated the closure of a widely followed arbitrage trade and incited disposals by the estate of the defunct FTX exchange. GBTC, or the daily rate of payments from the vehicle, peaked at $641 million on January 22 and declined to $394 million by January 25.
Grayscale Fund’s negative sentiment and the market crash
On the same day that nine other spot BTC ETFs, including those from BlackRock Inc. and Fidelity Investments, debuted in the United States, the Grayscale fund commenced trading in its new format. Bloomberg data indicates that the net inflow into the 10 spot ETFs as a whole is approximately $745 million, while these funds have received over $5 billion in investments.
Grayscale vehicle shares depreciated relative to the portfolio’s underlying BTC holdings in early 2021 when the product was closed-end. Due to the fact that ETF units have a tendency to abide by net asset value, speculators wagered that the discount would vanish in anticipation of the trust’s conversion, which has indeed happened.
The Grayscale Bitcoin Trust “has already solidified its position as a true capital markets instrument for risk transfer in Bitcoin” and “has been dominating trading volume,” according to John Hoffman, managing director of sales and distribution at Grayscale Investments, earlier this week. “GBTC’s diverse shareholder base will continue to deploy strategies that impact inflows and outflows,” he further stated.
Bitcoin surged nearly 160% in value over the course of the last year, outperforming traditional assets such as stocks, on the anticipation that US spot ETFs would spur institutional and individual investors to adopt the cryptocurrency more broadly.
Since the beginning of the year, the token has been declining and lagging behind global markets as investors await the realization of the hoopla. Bloomberg Intelligence reports that the US spot BTC ETFs had the most successful ETF launch in history, as measured by flow and trading metrics.
When the funds were approved on January 11, BTC reached an intraday high of $49,021 before falling to a low of $38,510 earlier this week. In 2021, it peaked at nearly $69,000 amidst the crypto euphoria of the pandemic era.
