FTX just sold around $1 billion worth of its Grayscale Bitcoin (BTC) exchange-traded funds (ETF). Could this have influenced the slump of the digital asset back to the $40K range?
The Massive Grayscale Bitcoin ETF Sell-Off by FTX
Citing “two people familiar with the matter” as sources, Coindesk explained that the ginormous outflow as of late was due to the huge sell-off triggered by investors dumping over $2 billion worth of Grayscale Bitcoin Trust (GBTC) shares into the market. This series of transactions started on January 11 after the US Securities and Exchange Commission (SEC) greenlit its conversion into a spot Bitcoin ETF.
A major portion of these were traced from the bankruptcy estate of FTX. The report said it was responsible for the outflow of 22 million Grayscale Bitcoin ETF stakes.
The outflow experienced by Grayscale since the approval of its spot Bitcoin ETF conversion is surprisingly the opposite of what its rivals in the market have been experiencing. BlackRock in particular has already surpassed $1 billion in assets under management (AUM) for these financial instruments last week, which was barely two weeks after the SEC’s go signal.
But then again, Grayscale has been in the market in the form of GBTC where it already accumulated $30 of assets prior to its conversion and the arrival of its competitors.
How is Bitcoin Holding Up
As of this writing at 4:00 PM UTC, Bitcoin is trading at $40,486, which shows a drop of 2.65% on the 24-hour chart. The trading volume for the digital asset is up by a whopping 121% as $21.55 billion worth of BTC moved between wallets and crypto exchanges. This indicates massive selling pressure for the coin during the timeframe as it hovered between a low of $40,364 and a high of $41,768.
The present valuation for BTC is significantly down from the $49K spike it reached on the way to the SEC’s endorsement of its related spot ETFs. The slump has been heavily blamed on a “sell the news” event occurring upon the arrival of the regulator’s verdict.
What Could Be Next? (Not an Investment Advice)
The source thinks that FTX has already depleted its GBTC shares, so the market could ease up following its last liquidation. Let’s not forget that there’s the Bitcoin halving coming up as early as April, which could turn the tide when people will start trading the event by next month, just in time for the 2024 Super Bowl.