Investor exodus from Grayscale’s Bitcoin Trust (GBTC) drives Bitcoin below $39,000

Grayscale’s Bitcoin Trust (GBTC) has experienced a massive investor exodus, causing the price of Bitcoin to drop below the $39,000 mark for the first time in nearly two months. Since its successful transition to a spot Bitcoin exchange-traded fund (ETF) on January 11, GBTC has witnessed over $3.4 billion in outflows. As a response, Grayscale has been depositing billions of dollars worth of Bitcoin to crypto exchange Coinbase Prime, presumably for sale.

GBTC outflows and the road ahead

GBTC’s recent performance has raised concerns about the extent of the ongoing investor exodus. According to Bloomberg ETF analyst Eric Balchunas, GBTC recorded an outflow of $515 million on January 23, resulting in a 13% reduction in its shares outstanding. 

While recent data suggests a potential slowdown in the outflow, there is still uncertainty about when this mass exodus will conclude.

Balchunas polled X, asking users to predict how much further bleeding GBTC might experience before stabilizing. Nearly half of the respondents estimated that the outflow could reach anywhere between 35% to 50%. At the same time, Balchunas and fellow Bloomberg ETF analyst James Seyffart believed it would likely happen at around 25% of outstanding shares.

Currently, Grayscale’s website indicates that there are 600.5 million shares outstanding, holding a total of 536,694.9 Bitcoin in trust. In contrast, data from CC15Capital reveals that 82,525 Bitcoin have exited GBTC since January 10.

FTX’s role and the Mt. Gox factor

The recent surge in outflows has been partially attributed to the activities of the defunct crypto exchange FTX. Reportedly, FTX sold off two-thirds of its 22.3 million shares in GBTC for three trading days. FTX still retains approximately 8 million shares, valued at roughly $281 million, which are yet to be sold.

Another factor looming over the cryptocurrency market is the potential movement of Bitcoin from the infamous Mt. Gox exchange. The Mt. Gox trustee has reportedly contacted creditors to facilitate identity verification for crypto exchange accounts. 

These accounts are intended for repaying Bitcoin and Bitcoin Cash, potentially exerting further downward pressure on Bitcoin’s price.

As of the latest available data, Bitcoin is trading at $39,949, representing a modest 0.60% increase on the day, according to CoinMarketCap. However, it is worth noting that the Crypto Fear & Greed Index has reached a 100-day low, scoring 48 on January 24. This indicator reflects growing apprehension and uncertainty in the cryptocurrency market.