Bitcoin and ETF traders are overstating the impact of GBTC selling
The spot Bitcoin ( BTC ) exchange-traded fund (ETF) instrument debuted on Jan. 12. The first trading session was somewhat chaotic as investors had no clue as to what the actual inflow was, and the cd3e7645-3e8d-4f75-a61b-50bae7a39797 makers themselves faced issues with the different liquidation timelines for each instrument. Still, the $4.66 billion volume on Bitcoin spot-based ETFs set a record high in the traditional finance industry, but is this enough to justify a Bitcoin price rally above $47,000?
Grayscale’s GBTC outflows offset most of the industry’s inflows
Some criticism emerged regarding the Grayscale GBTC, which previously existed as a Trust fund and held over $27 billion worth of BTC under management. In the first three trading days alone, this instrument experienced $1.17 billion of net outflows . Most of that movement happened on Jan. 13 and Jan. 16, balancing out 86% of the inflows to other spot Bitcoin ETFs in the period. In absolute terms, this translates to a mere aggregate $157 million net inflow in 2 days.
Most of the $782 million net inflow highlighted in the data originally presented by senior Bloomberg ETF analyst Eric Balchunas occurred on the first trading session. Due to its different settlement times, arbitrage desks were unable to exit their GBTC positions on Jan. 12. For instance, a short (negative) position on CME Bitcoin futures could have been used to offset the GBTC long (positive) to benefit from the discount that the fund shares used to trade prior to the spot ETF approval.
Critics are right to infer that most of the spot Bitcoin ETF inflows have been paired with outflows from the Grayscale GBTC, but even if one excludes the first trading day, there’s a total net $157 million 2-day inflow in the products issued by BlackRock, Fidelity, Bitwise, Ark/21 Shares, Invesco and the other ETFs. The question investors should think about is whether the exit from GBTC will continue and if the aggregate net inflow is sustainable in the long run.
Assuming the same pattern continues for the next month, meaning GBTC experiences an $11.3 billion net outflow while the remaining spot ETF contenders capture a $13 billion net inflow, what is the expected price impact of the $1.7 billion growth of the spot Bitcoin listed funds in the U.S.? From a trading perspective, the number seems quite irrelevant since those ETFs traded a combined $1.9 billion on Jan. 16 alone.
There is unquestionable ongoing demand for spot Bitcoin ETFs
Traders tend to confuse volumes and flow as, in every financial market, buyers and sellers are matched at all times. However, it is impossible to know if the seller is merely closing a position acquired earlier in the day or whether the buyer is doing the opposite trade in derivatives markets or at different exchanges to benefit from arbitrage opportunities.
Related: VanEck to delist Bitcoin Strategy ETF, citing performance and investor interest
One thing is for sure: given that, Grayscale GBTC's fee is 1.5% while other contenders offer 0.25% or less, odds are investors will gradually migrate their holdings. So, regardless of whether it takes 20 or 120 days for this movement to reach some form of plateau as the GBTC holdings stabilize at a certain level, investors should focus on who is buying the remaining $157 million in two days.
I find it quite remarkable how the market keeps absorbing GBTC selling.
— Byzantine General (@ByzGeneral) January 17, 2024
Someone is buying.
X social network user ‘Byzantine General’ asked this exact question on Jan. 17, implying that there’s an actual ongoing demand for the spot Bitcoin ETFs. At current price levels, Bitcoin miners receive $76.1 million worth of newly issued coins every 2 days, so the recent spot ETF net inflows are slightly 2 times over that value. Plus, whatever the resulting price impact is, that will drastically change after the Bitcoin halving in April .
It seems premature to assume that the marginal spot ETF buying will continue to counterbalance the net outflow from Grayscale GBTC funds, and data could easily shift to favoring diminishing aggregate assets under management for the industry, including CME’s Bitcoin futures open interest. Still, Bitcoin bulls can celebrate that eventually the GBTC holdings will deplete or accommodate, paving the way for a bull run above $47,000 as investors realize the Bitcoin halving impact on the supply side.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
South Korea to Launch Spot Bitcoin ETF This Year
South Korea’s ruling People Power Party has confirmed that the trading of spot digital asset ETFs will be permitted by the end of this year, according to local media outlet Edaily. For the first time, this development will allow domestic investors to gain exposure to major cryptocurrencies like Bitcoin and Ethereum through exchange-traded funds.

AUSTRAC Warns Inactive Crypto Exchanges of Deregistration
The Australian Transaction Reports and Analysis Centre (AUSTRAC) has raised fresh concerns about the integrity of the country’s crypto landscape, revealing that several cryptocurrency exchange providers remain on the official register despite no longer being operational. These dormant platforms now risk deregistration unless they voluntarily withdraw.

Loopscale Recovers Nearly $2.9M in Stolen Funds After Weekend Exploit
Decentralized finance protocol Loopscale has successfully retrieved almost half of the $5.7 million drained from its vaults during a major security breach on April 26. The recovery follows ongoing white-hat negotiations with the exploiter, which have shown significant progress recently.

Hyperliquid to Introduce Enhanced Fee Discounts and Account Linking Feature
Hyperliquid is set to roll out a revamped fee discount system and a new account linking feature on May 5, 2025, at 03:00 UTC. These updates aim to enhance trading incentives and user flexibility on the platform.

Trending news
MoreCrypto prices
More








