Grayscale, the largest digital asset manager, has seen more than $3.3 billion in outflows since converting its GBTC fund into a Bitcoin ETF. BlackRock and Fidelity are the biggest buyers of Bitcoin, with 39,925 and 34,127 BTC, respectively, while Grayscale has offloaded 82,525 BTC. ETF Store President Nate Geraci suggests that a strategic acquisition of Grayscale could make sense for the right traditional ETF issuer.
Cryptocurrency markets have been rocked by days of Bitcoin dumping by the sector’s largest digital asset manager, Grayscale. Bitcoin continues to fall below $40,000, but much of Grayscale’s outflows have been picked up by other fund managers, so why are traders selling their coins?
Grayscale has been selling Bitcoin since US regulators approved spot BTC exchange-traded funds on January 11.
Sale of Grayscale Bitcoin Spot ETF Shares Continues
Since being allowed to convert its GBTC fund into a spot Bitcoin ETF on Jan. 11, the firm has seen more than $3.3 billion in outflows, and it has been depositing large amounts of Bitcoin on Coinbase in preparation for new sales.
The reason for the exodus from Grayscale is largely because investors are rebalancing their portfolios and entering funds with lower fees for better returns. On January 24, CC15Capital, which has been publishing updates on Bitcoin ETF holdings, stated the following:
“Stop panic selling your Bitcoin just because you see panic-inducing tweets about GBTC coins being sent to Coinbase every morning.”
On January 24, ETF analyst Eric Balchunas conducted a survey to gauge when people think Grayscale will stop selling. “GBTC has bled 13% of its outstanding shares. How far do you think that number goes before the mass exodus stops?” he added.
Nearly half of respondents voted for the 35%-50% option, suggesting sentiment remains bearish. He added that both he and fellow analyst James Seyffart think it will be around 25%: “But this is not something I would eat sushi for, too many unknowns.”
According to its website, Grayscale Bitcoin Trust 536,694 BTC for an estimated value of $21.3 billion. Therefore, it is unlikely that the sale is over yet. However, a lower BTC price will be good news for other ETF issuers and for investors hoping to buy the dip.
Bitcoin Acquisition Potential
ETF Store President Nate Geraci commented that “A strategic acquisition of a company like Grayscale makes a lot of sense for the right traditional ETF issuer, assuming the price is acceptable.”
“While only two weeks old, the spot bitcoin ETF category is already wildly competitive and has clearly turned into a scale game given how low expense ratios are. A traditional ETF issuer could quickly boost assets under management, gain business operating expertise, and also acquire some ‘crypto street cred’ by targeting the right crypto-fund native firm,” Geraci further commented.
Seyffart backed the idea that a larger player could acquire the crypto asset manager:
“Someone acquiring Grayscale is theoretically possible, possibly even likely in a long enough time frame, especially with the current issues surrounding its parent company.”
Meanwhile, Bitcoin prices had once again lost $40,000. Most recently, they had lost 0.8% on the day, standing at $39,710.
According to CryptoPredictions, the BTC Price is forecasted for today (24.01.2024) to be in the $35,398.986 – $52,057.332 price range. Bitcoin is predicted to end today at $41,645.865.
By Leonardo Perez
