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Grayscale Battling Outflows And Lower-Cost ETFs, Q1 Revenue Stays Flat At $156M

Grayscale Investments, the issuer of one of the recently approved spot Bitcoin exchange-traded funds (ETFs) in the US, saw flat revenues in the first quarter of the year due to its decision to maintain fees on its flagship Grayscale Bitcoin Trust ETF (GBTC). 

Grayscale Exceeds Expectations Despite Outflows

According to a shareholder letter from its parent company, Digital Currency Group (DCG), the operator of the Grayscale Bitcoin Trust recorded $156 million in revenue, showing little change from the previous quarter.

Since the GBTC trust’s conversion to an ETF in January, Grayscale has seen outflows of about $17.4 billion as investors appear to have shifted their assets to new, lower-cost funds offered by BlackRock and Fidelity, the leaders in the US ETF race in terms of inflows recorded since January. 

While GBTC charges a 1.5% management fee, many of its competitors charge less than 0.3%, leading to outflows. In response, Grayscale announced plans in March to seek approval from the Securities and Exchange Commission (SEC) to spin off some of Grayscale’s assets into a new, lower-fee “Bitcoin Mini Trust.” 

Despite the outflows, the Q1 revenue attributable to GBTC exceeded Grayscale’s expectations. The firm had previously anticipated outflows due to increased competition under the ETF wrapper. Grayscale previously charged a 2% sponsorship fee before the trust was converted. 

The flat revenue was also attributed to higher average Bitcoin and Ethereum prices and a decrease in assets under management (AUM).

In contrast to Grayscale’s performance, all US spot Bitcoin ETFs have witnessed a total net inflow of over $11 billion thus far. However, demand for these ETFs has recently declined amidst tightening financial conditions in the US, where the Federal Reserve (Fed) faces the challenge of addressing persistent inflation.

DCG Reports 11% Q1 Revenue Increase

Digital Currency Group, founded by Barry Silbert and the parent company of Grayscale, reported an 11% quarter-over-quarter increase in Q1 revenue to $229 million, primarily due to higher asset prices. 

However, revenue growth lagged behind Bitcoin’s price appreciation, which rose more than 60% during the same period. In its letter, DCG attributed this disparity to lower GBTC sponsor fees, redemptions, and steady mining revenues at its Foundry subsidiary.

Foundry, DCG’s mining subsidiary, experienced a sequential revenue increase of 35%, propelled by staking and equipment sales revenue. Meanwhile, Luno, the company’s crypto exchange subsidiary, witnessed a 46% quarter-over-quarter sales boost, driven by a significant surge in trading volume.

Grayscale

At press time, Bitcoin is trading at $62,100 and has recently encountered significant price volatility. These price swings have failed to establish a stable position above crucial price thresholds.

Featured image from Shutterstock, chart from TradingView.com 

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Record-Breaking GBTC Outflows Send Bitcoin Down 14% To $62,000

As reported by Fortune Magazine, the cryptocurrency market has been experiencing significant volatility as Bitcoin (BTC) has experienced a sharp decline that has had a domino impact on other cryptocurrencies. The recent drop in the price of Bitcoin, coupled with outflows from Grayscale’s GBTC, has raised concerns among investors. 

Bitcoin Sees 14% Correction From ATH

Bitcoin suffered a 14% drop since reaching its all-time high (ATH) of $73,700 last week, briefly touching $62,483 on Tuesday morning. However, it recovered and stabilized around $64,900, just below the $65,000 mark. 

The decline was attributed to record outflows of over $640 million from Grayscale’s Bitcoin Trust (GBTC). In comparison, other spot Bitcoin ETFs saw inflows of less than $500 million, resulting in a net outflow of $15 million on Monday, according to Bloomberg ETF expert James Seyffart. 

Bitcoin

This outflow from GBTC, combined with the cautious sentiment surrounding the Federal Open Market Committee (FOMC) meeting in the US, has had a significant impact on Bitcoin’s performance.

As recently reported by NewsBTC, investors exhibited caution ahead of the FOMC meeting, closely monitoring the potential changes in interest rates. Recent higher-than-expected inflation data, as indicated by the US Consumer Price Index (CPI) and Producer Price Index (PPI), dampened expectations of interest rate cuts. 

According to Fortune, the CME FedWatch Tool projected a 99% likelihood of rates remaining unchanged, further affecting market sentiment. Per the report, investors were keen to gauge the Federal Reserve’s stance on monetary policy, contributing to the cautious trading environment.

In the same context, the Bank of Japan raised its key interest rate from -0.1% to 0% to 0.1% in response to rising consumer prices. This was the first rate increase in 17 years.

Crypto Futures Traders Take A Hit

The drop in Bitcoin’s price had a cascading effect on other cryptocurrencies. Major altcoins like Ethereum (ETH) and Solana (SOL) experienced significant declines of 8.1% and 12.5% over the past 24 hours, respectively. 

Meme coins, including Floki Inu (FLOKI), Bonk Inu (Bonk), and Dogecoin (DOGE), also suffered losses of 34%, 28.5%, and 24.8%, respectively, during the past week. 

The decline in cryptocurrency prices resulted in over $440 million worth of liquidations for traders of crypto futures. Traders who had leveraged positions betting on higher prices faced significant losses. Most of these liquidations occurred on Binance, totaling $212 million, followed by OKX at $170 million. 

Bitcoin

Despite its price correction, BTC retains substantial gains of over 26% and 132% in the past thirty days and year-to-date timeframe, respectively.

Featured image from Shutterstock, chart from TradingView.com

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Bitcoin Hits $52,000 High: Are These Giant Sell-Offs About To Crash The Crypto Party?

According to a recent report from Spot On Chain, Bitcoin might be on the edge of a notable plunge. So far, the flagship cryptocurrency has recently broken through the $52,000 mark and traded above it for the first time since December 2021.

However, Spot On Chain reveals that Bitcoin faces potential challenges that could affect its immediate market performance. Two significant sell-off events loom on the horizon, potentially influencing Bitcoin’s price dynamics in the short term.

These developments have sparked speculation, prompting a closer examination of their possible impacts on the cryptocurrency market.

Major Bitcoin Sell-Off Events On The Horizon

The first of these events involves Genesis, a prominent crypto asset manager authorized to offload a significant portion of its Grayscale Bitcoin Trust (GBTC) shares. The second event is marked by the US government’s announcement to sell some of its Bitcoin holdings acquired from the Silk Road platform.

Genesis has received approval to sell 35 million GBTC shares, estimated to be worth around $1.3 billion. This occurrence mirrors an earlier liquidation event involving FTX, which notably impacted Bitcoin’s market price, illustrating the potential volatility such moves can introduce.

It is worth noting that the upcoming Genesis sell-off represents a significant moment for Bitcoin, as it tests the resilience of its recent price gains against the backdrop of large-scale disposals.

The US government’s decision to auction off 2,875 BTC, valued at $150.6 million, adds to the market’s cautious outlook. With the government holding one of the largest Bitcoin reserves globally, its actions have a marked influence on market perceptions and the cryptocurrency’s price stability.

Spot On Chain highlighted historical instances, such as the sale of 8.2K BTC through Coinbase, which have shown that government sell-offs can temporarily lead to fluctuations in Bitcoin’s price.

Bitcoin (BTC) price chart on TradingView.

Optimism Amid Uncertainty

Despite these concerns, certain segments of the crypto community view these events as minor hurdles in the broader trajectory of Bitcoin’s growth.

Notably, the increasing involvement of Bitcoin spot exchange-traded funds (ETFs) in the Bitcoin market suggests a growing institutional interest that could offset the effects of the sell-offs.

CryptoQuant has recently highlighted that roughly 75% of new investments into Bitcoin are coming from spot ETFs. This is quite evident as BitMex research reported that the Bitcoin spot ETF market saw an inflow of over $340 million yesterday.

Featured image from Unsplash, Chart from TradingView

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Bitcoin ETFs Experience Day 12 Reversal, GBTC Selling Slows, Fidelity And Blackrock Garner $400 Million

Bitcoin has witnessed a positive turn of events as it reclaimed the $43,000 mark on Tuesday, thanks to a significant reduction in selling pressure from asset manager Grayscale. The reversal in Bitcoin ETFs during day 12 of trading has seen more inflows than outflows. Fidelity and Blackrock recorded a combined $400 million across their Bitcoin ETFs under the ticker names FBTC and IBIT, respectively. 

Bitcoin ETFs Record Third-Largest Money Day

According to market expert James Mullarney, Grayscale Bitcoin Trust (GBTC) has experienced a noticeable reduction in selling pressure, as reflected by the slowing down of GBTC selling. 

Day 12 of trading showed a substantial inflow compared to outflow, marking the third-largest money day ever in net money flow, bringing in $256 million. 

Bitcoin ETFs

Mullarney further states that adding new Bitcoin ETFs has contributed to a net positive of $1 billion in ETFs, with an estimated 25,000 Bitcoin added to the market. The new Bitcoin ETFs now hold a total of 150,000 BTC in aggregate.

Miners Sell Most Coins Since May 2023

Despite these positive developments with Bitcoin ETFs, there is an ongoing increase in selling pressure from miners. A recent CryptoQuant report reveals that miners have sold the most coins since May 2023. 

The flow of coins from miner wallets to spot exchanges reached its highest value since May 16, 2023, with over 4,000 Bitcoin amounting to approximately $173 million in selling pressure.

Bitcoin ETFs

Although miners have increased their selling activity, CryptoQuant asserts that the market has absorbed this pressure “calmly”. It is important to note that the reserves in mining portfolios have remained at the same level since the beginning of January. 

CryptoQuant highlights that it is crucial to consider that these actions do not necessarily indicate a “dump” by miners. The firm concluded:

It is true that there were several interactions with exchanges during this period, some quite significant, but this does not correspond to a “dump” on the part of these entities. Furthermore, it is necessary to be careful when reading messages like “miners are dumping coins”, this analyzes may not take into account the return of these coins to miners’ wallets. 

New All-Time High For Bitcoin After November?

Renowned crypto analyst, CryptoCon, cautions against the belief that “this time is different” for Bitcoin, highlighting the recurring nature of its market cycles. With three completed cycles and a fourth underway, CryptoCon emphasizes that historical patterns, including the launch of Bitcoin ETFs, have consistently influenced Bitcoin’s price trajectory.

CryptoCon emphasizes that Bitcoin’s price movements have followed distinct cycles, and he warns against the notion that each cycle will deviate significantly from the preceding ones. 

Despite the anticipation surrounding the launch of ETFs, historical evidence suggests that they have coincided with local price highs rather than instant new all-time highs. 

CryptoCon argues that the repeated occurrence of such patterns should serve as a reminder that “this time is different” often proves to be an illusory belief.

According to CryptoCon’s analysis, a period of sideways movement is expected to commence soon after the completion of the ongoing correction, which saw BTC retrace to the $38,500 level on Tuesday, January 23. 

This phase is predicted to last approximately four months, culminating in a second early price peak in June 2024, according to Crypto Con. 

Following this, the analyst foresees the possibility of new all-time highs occurring after November 28th, 2024. However, it is crucial to note that the cycle’s peak will occur within approximately 21 days from this date, around November 28th, 2025.

Bitcoin ETFs

Featured image from Shutterstock, chart from TradingView.com

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Bitcoin ETF Day 8 Update: Market Rebound Signals Bottom As Grayscale Selling Slows Down

Since the approval of Bitcoin ETF applications by the US Securities and Exchange Commission (SEC) on January 11, followed by the commencement of trading a day later, the ETF race has witnessed impressive trading volumes on each trading day.

As the market recovers from a sharp correction, recent developments indicate a notable slowdown in Grayscale selling, which could potentially signal a rebound for the Bitcoin price following the recent 20% drop.

Market expert James Mullarney and Bloomberg ETF expert Erich Balchunas provide key insights into Bitcoin ETF fund flows after 8 days, shedding light on the evolving dynamics and investor sentiments surrounding this development.

Hope For Bitcoin Bulls 

One of the key observations made by James Mullarney is the deceleration in Grayscale’s selling activities. While Grayscale continues to sell, the pace of their selling has significantly reduced, indicating a potential shift in their strategy. 

This is seen as a positive sign for the market, as a slowdown in Grayscale selling could contribute to stabilizing Bitcoin prices and restoring investor confidence.

Bitcoin ETF

Amidst this backdrop, major players in the asset management industry, such as BlackRock and Fidelity, have showcased their resilience and commitment to Bitcoin. 

BlackRock, one of the world’s largest asset managers, currently holds 44,000 BTC in assets under management (AUM), indicating their growing exposure to the cryptocurrency. 

Similarly, Bitcoin ETF issuer Fidelity, renowned for its digital asset services, stands strong with 40,000 BTC AUM, demonstrating their continued confidence in Bitcoin and its long-term potential.

Moreover, the dynamics of the recent sell-off are noteworthy. The majority of the selling pressure observed in the market involved FTX, which completed day 8 of trading. 

However, as the market enters day 9, the expectation is for a significant reduction in selling pressure from FTX and Grayscale, potentially contributing to a more stable market environment, according to Mullarney. 

The emergence of Bitcoin ETFs as significant holders of the cryptocurrency is another positive aspect to consider. ETFs have not only absorbed the 101,600 BTC sold by Grayscale but have also increased their holdings by an additional 21,100 BTC in just 8 days. 

According to  Mullarney, this indicates growing institutional interest in Bitcoin, as ETFs continue to accumulate significant amounts of the cryptocurrency.

Bitcoin ETF Issuers Counter Grayscale Selling

Despite Grasycale’s selling spree, Mullarney highlights that the Bitcoin ETF managers alone are acquiring 15 times the daily Bitcoin supply, surpassing 13,444 BTC against the 900 BTC daily creation rate. 

This notable inflow of BTC demonstrates the strong demand from institutional investors and highlights the potential impact of ETFs on the overall Bitcoin market. 

Interestingly, the new ETFs have absorbed a net total of 122,000 BTC in just 8 days, overcoming the impact of Grayscale’s release and contributing to a positive net inflow.

Bloomberg ETF expert Erich Balchunas adds further insights to the analysis. Balchunas notes that the volume of Grayscale Bitcoin Trust (GBTC) has decreased, which could be a sign of exhaustion in selling. 

However, $515 million was withdrawn from GBTC yesterday, resulting in a total outflow of $3.96 billion since its conversion to an ETF. On a more positive note, there was a net inflow of $409 million on the ninth day, indicating renewed investor interest.

Bitcoin ETF

Featured image from Shutterstock, chart from TradingView.com

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Bitcoin Price At Risk? Grayscale’s $335M Coinbase Transfer Stirs $30,000 Plunge Potential

The Bitcoin price has experienced a notable shift as selling pressure mounts, with BTC bears gaining the upper hand. Asset manager Grayscale, the owner and manager of the Grayscale Bitcoin Trust (GBTC), is a significant contributor to this trend. 

Since the trading of spot Bitcoin exchange-traded funds (ETFs) began on January 12, Grayscale has been on a selling spree, as evidenced by substantial transfers of BTC to the United States-based crypto exchange Coinbase.

Bitcoin Price Under Pressure As Grayscale Selling Spree Continues

According to Akrham Intelligence data, in addition to the previously reported 69,994 BTC ($2.9 billion) transfers, Grayscale sent an additional 8,593,075 BTC (approximately $335.19 million) to the exchange on Tuesday, suggesting the possibility of further selling activities.

Bitcoin price

These developments have affected the Bitcoin price, which has experienced a significant downtrend, declining by 20% over the past week and a half. 

On Tuesday, the largest cryptocurrency dropped as low as $38,500, placing considerable pressure on a crucial support level. Despite the bearish pressure, the $38,500 support level has demonstrated resilience so far, with the cryptocurrency rebounding to $39,300 at the time of writing. 

Nevertheless, the duration of Grayscale’s selling spree remains uncertain, and if market sentiment continues to turn negative, Bitcoin could potentially revisit the $30,000 mark. This figure is just above the key $29,000 level that marked the beginning of the bull run that took Bitcoin to its 22-month high of $49,000 on January 11th.

Bears On The Rise

If the $38,500 threshold succumbs to Grayscale’s selling pressure and profit-taking, market observers should closely monitor the $37,750 level as the next resistance. 

Failure to hold above this level would open the door to a potential decline toward the major resistance at $35,600, which could further prevent a dip to the next support level at $33,000.

However, if these support levels are breached and the Bitcoin price continues its downtrend, the next significant key levels to watch for bullish momentum would be $29,000 to $30,000. A breakdown below these levels could signal an end to the current bull market structure and grant the bears the upper hand in the mid-term, at least until the anticipated halving event in April. 

Historically, halving events have acted as major catalysts for the Bitcoin price, and their influence has been demonstrated.

As the Bitcoin market faces intensified selling pressure and Grayscale’s ongoing selling spree, market participants remain cautious about the potential for a significant price plunge. The coming days and weeks will be critical in determining whether Bitcoin can regain its bullish momentum or if it will succumb to further downward pressure.

Bitcoin price

Featured image from Shutterstock, chart from TradingView.com