Bitcoin Tops $42K as Outflows Abate From Grayscale’s Bitcoin ETF

GBTC has hemorrhaged $5 billion, but the tides are shifting

By: André Beganski

January 29, 2024

GM! This week: GBTC outflows show signs of easing, OpenSea says it’s open to deals, the SEC punts on BlackRock and Grayscale’s Ethereum ETF applications, sales stemming from the Silk Road loom, and Bitcoin’s halving could fall on 4/20.

GBTC Outflows Abate

As spot Bitcoin ETFs endure their 12th day of trading on Wall Street, the crypto cognoscente has zoomed in on one trend that’s supposedly holding Bitcoin’s price back: Outflows from Grayscale’s Bitcoin Trust (GBTC) have swelled to $5 billion. 

Overshadowing enthusiasm from the first half of this month, daily outflows from GBTC peaked last Monday at $641 million. But, as of Friday, the pace of outflows from GBTC had slowed to $255 million, according to data from BitMex Research.

A progressive easing of outflows from GBTC would be a boon for the crypto market, Fundstrat’s Sean Farrell wrote in a note last week. Still, analysts like Bloomberg Intelligence's Eric Balchunas have said that any Bitcoin “dumping,” given that Bitcoin ETFs have positive net inflows, is coming from crypto traders that are “inside the house,” so to say.

Across all 10 Bitcoin ETFs tracked by BitMex Research, daily outflows ranged from $80 million to $160 million last week — and outflows won out for four straight days. That being said, Bitcoin ETFs took in a modest $15 million on Friday, bringing ETF inflows to $760 million since launch.

OpenSea Sets Sale?

Times change — and pretty quickly in crypto, at that. This weekend, DL News reported the once-dominant NFT marketplace OpenSea is open to potential deals, which could include a sale of the company itself. It comes after OpenSea unveiled an eye-popping valuation of $13.3 billion in 2022, and then the overall marketplace for digital collectibles steadily began to fade.

The platform’s drop-off in trading activity paints a drastic picture for OpenSea: According to a Dune dashboard, NFT trading volume on OpenSea totaled $135 million this month, a notable drop compared to $447 million a year ago, and way off from the $4.9 billion in JPEGs that traded hands in January of 2022.

However, it seems Devin Finzer, OpenSea’s CEO, isn’t too happy with the report’s overall thrust. In a follow-up statement, he told DL News that OpenSea has “no plans to be acquired, nor are we looking for a suitor. If something came up, we’d keep an open mind, but that is pure conjecture.”

Silk Road Sales

It seems that GBTC holders aren’t the only ones looking to sell. Last week, this headline caused jitters on Crypto Twitter, as the government appeared poised to sell Bitcoin seized years ago in connection to the defunct dark-web marketplace Silk Road.

However, the government’s notice did not pertain to the 69,000 Bitcoin ($2.9 billion) it had officially gained in December via a court-mandated forfeiture. The latest notice was regarding a smaller sum of around 3,000 Bitcoin ($129 million), which had been seized by Sean Bridges and Ryan Farace, who sold Xanax on the Silk Road under the moniker Xanaxman, back in 2021.

With Bitcoin firmly in its post-ETF trough, though, it was a dower development for markets in some sense.

SEC Punts on Ethereum ETFs

Last week, the Securities and Exchange Commission gave itself more time to respond to Grayscale and BlackRock’s spot Ethereum ETF applications, a move that wasn’t so shocking after the regulator delayed its deadline to respond to Fidelity’s application the week before.

Kicking the regulatory can down the road will happen “sporadically,” said James Seyffart of Bloomberg Intelligence, pointing to May 23rd as a major date. At that time, the SEC will face its final decision deadline on a spot Ethereum ETF application from Ark Invest and 21 Shares.

If the SEC does reject any spot Ethereum ETF applications, some wonder whether the regulator will have to defend its basis in court. “I think that kind of a lesson will certainly stick with us,” SEC Commissioner Hester Peirce told Coinage in an exclusive interview, referencing the SEC’s loss to Grayscale over GBTC last summer that paved the way for this month’s approvals.

Meanwhile, SEC Chair Gary Gensler cast cold water on any hype. “As I said two weeks ago, that which we did with regard to Bitcoin exchange-traded products is cabined to this one commodity non-security and shouldn't be read to be anything other than that,” he said during a media briefing.

4/20, Halve It

Set to take place on an important day for cannabis enthusiasts across the globe, Bitcoin’s halving is slated for 4/20, per Blockworks. However, it’s hard to predict the halving precisely, with estimates ranging from April 11 to April 21 for the day Bitcoin’s block subsidy is slashed.

The reduction in Bitcoin’s block subsidy, which takes place around every four years, will reduce the reward that miners earn from mining to 3.125 Bitcoin from 6.25 Bitcoin. The resulting decrease in Bitcoin’s incoming supply has historically boosted prices, analysts have said.

Out there, someone, somewhere is perhaps already prepping a few memes.

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