25 January 2024
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.
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.
Featured image from Shutterstock, chart from TradingView.com