Insight: Grayscale’s GBTC Witnessed Outflows of $4.3 Billion in Ten Days! How Much Further Will Bitcoin Decline? Three Key Observations to Consider

This week’s market observation column: Bitcoin ETF approved, how much further will it fall?
As mentioned last week, with the meme frenzy, there was a high probability that the cryptocurrency market would decline. This week, it was confirmed with the sell-off of the Bitcoin spot ETF, resulting in a 6.6% drop in Bitcoin and a 12.5% drop in Ethereum over the past 7 days.
The “Sell The News” phenomenon is common in capital markets. It describes the rise in asset prices, leverage, and market sentiment before a bullish event, but prices often quickly drop after the event.
As for the main reason for the decline, the market has blamed the sell-off of Grayscale’s GBTC.
Grayscale’s GBTC business was established in 2013, meaning that investors’ Bitcoin has been trapped in Grayscale for over 10 years without redemption. It has accumulated a large amount of Bitcoin, and recently, as the market has recovered, the negative premium has gradually narrowed. At this time, it is natural for investors to choose to redeem GBTC for profit-taking.
In the chart below, we can see that Grayscale has a net outflow of approximately $500-600 million per day, with a total outflow of $4.3 billion in less than 10 days. It is the only fund among the 11 BTC ETFs listed that has a net outflow. However, there has been a recent slowdown, with an outflow of $428 million on January 24th.


In my subjective opinion, the impact of Grayscale’s sell-off is diminishing over time:
As mentioned earlier, the outflow of GBTC has slowed down.
While it is true that Grayscale is selling off, all other BTC ETFs are experiencing net inflows, and the total inflow of the 11 ETFs is greater than the outflow. So, is the market really falling solely because of Grayscale’s sell-off? This remains to be debated.
According to reputable media outlet “Coindesk,” FTX is also an investor in GBTC, and the bankruptcy restructuring team has sold nearly 22 million GBTC shares (about $1 billion) and no longer holds any GBTC shares, which is expected to alleviate the selling pressure.
However, there are still potential bearish factors in the market:
GBTC is expected to continue to see outflows, and whether the inflow of funds into the other 10 ETFs can support the selling pressure will be the focus going forward. It is expected that within the next two months, Mt.GOX will release 200,000 Bitcoins to its original holders.
December 2023 – Mt.Gox’s creditors received compensation via PayPal in Japanese Yen. Most of the Mt.Gox creditors purchased Bitcoin at a price below $1000.
Between November 2020 and 2022, the US government confiscated a total of 207,189 Bitcoins in three operations, including those related to the dark web, hacker Jimmy Zhong, and the hack of the cryptocurrency exchange Bitfinex. They announced plans to sell these illicit Bitcoins in four phases.
Recap of key industry news this week:
CME FedWatch: 97.9% probability of no change in rates in February
According to CME FedWatch: There is a 97.9% probability that the Fed will keep interest rates unchanged in the 5.25%-5.50% range in February, and a 2.1% probability of a 25 basis point rate cut. The probability of no change in rates in March is 52.9%, with a cumulative 46.2% probability of a 25 basis point rate cut and a 1.0% probability of a cumulative 50 basis point rate cut.
Ethereum Foundation: If Sepolia and Holesky upgrades go smoothly, the Cancun upgrade will be deployed on the Ethereum mainnet
The Ethereum Foundation stated that Sepolia and Holesky will be upgraded within the next two weeks. Dencun will be launched on Sepolia at epoch 132608 (January 31, 6:51), and on Holesky at epoch 29696 (February 7, 19:35). Once the testnet upgrades run smoothly, the Cancun upgrade will be deployed on the Ethereum mainnet as planned.
EigenLayer extends the staking window to February 6th to February 10th and removes the personal limit on all LST
The Ethereum staking protocol EigenLayer announced that it will introduce three new LST tokens, sfrxETH, mETH, and LsETH, to the EigenLayer staking ecosystem, and will remove the personal limit of 200,000 ETH for LST.
Opinion articles present diverse views and do not represent the position of “WEB3+.”
Proofreading Editor: Gao Jingyuan