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Is GBTC Sell-Off Nearing an End? A Closer Look at Recent Events on the Bitcoin ETF Market

The weakening of GBTC outflows could provide a relief for the downtrending crypto market

Grayscale Bitcoin Trust (GBTC) has seen a notable slowdown in outflows for two consecutive days. This development is stirring optimism among investors, as it could signal the tapering of a massive Bitcoin dumping spree. According to BitMEX Research, the outflows on January 24th amounted to $429 million, the lowest since GBTC's spot Bitcoin ETF was launched on January 11th. This figure represents a 33% reduction from the start of the week, igniting speculation about a potential stabilization in the volatile crypto market.

The recent outflow data from GBTC is drawing attention from industry experts and investors alike. Bloomberg ETF analyst Eric Balchunas, in a January 25th social media post, observed that while the outflows are decreasing, they still represent a significant volume. He noted that there are "too many unknowns" to definitively conclude when the GBTC exodus will cease. Over the course of nine trading days, GBTC has experienced a substantial loss of 106,092 BTC, valued at approximately $4.4 billion. 

Eric Balchunas (@EricBalchunas):

$GBTC outflows today were ‘only’ $425m, lowest bleed since day one and seemingly trending down. That said it’s still a pretty large number. Source: Bloomberg terminal”

Balchunas cautions that the current slowdown in daily outflows does not necessarily indicate an end to the GBTC "bleeding." He estimates that GBTC might lose around 25% of its shares outstanding before the outflow trend reverses.

Insight into GBTC's outflow data and misinterpretation risks

Understanding the nuances of GBTC's outflow data is crucial, as misinterpretations could lead to skewed market perceptions. Blockchain tracking firm Arkham Intelligence has raised concerns about potential misunderstandings of the data. They explain that due to Bitcoin's blockchain structure, transaction outputs are often divided among multiple addresses. As a result, not all BTC moved from Grayscale’s Trust is necessarily being redeemed. Arkham's January 24th post clarified that GBTC custody wallets typically distribute to multiple addresses, including Coinbase Prime and new GBTC custody addresses. 

Arkham (@ArkhamIntel):

“Due to the input-output structure of its blockchain, Bitcoin transaction outputs are often split amongst multiple addresses.

GBTC custody wallets frequently send to multiple addresses, most often a Coinbase Prime deposit and a fresh GBTC custody address. This means that some of…”


This complexity means that some of the BTC involved in these transactions may not go to the main recipient as initially assumed. Such insights are vital for investors and market analysts to accurately gauge the dynamics of GBTC's activities.