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GBTC Outflows Show Signs of Slowing, Easing Concerns of Bitcoin Sell-Off

Grayscale’s Bitcoin Trust (GBTC) has displayed a ray of optimism as its outflows have recently slowed for the second consecutive day, hinting that the massive Bitcoin selloff might be nearing its conclusion.

Data from BitMEX Research indicates that on January 24th, GBTC outflows amounted to $429 million, marking the smallest daily outflow since the inception of Grayscale’s spot Bitcoin ETF on January 11th.

This also signifies a 33% reduction compared to the outflows observed at the beginning of the week on January 22nd.

Eric Balchunas, an ETF analyst at Bloomberg, observed on January 25th that GBTC outflows appear to be on a downward trend, though he acknowledged that the figure is still considerable.

He pointed out that there remain several uncertainties regarding when the “mass exodus” from GBTC will come to an end.

Over the course of nine trading days, GBTC has seen a significant outflow of 106,092 BTC, equivalent to around $4.4 billion.

However, it is crucial to note that a slowdown in daily outflows does not necessarily indicate that GBTC’s “bleeding” has ceased or significantly slowed down.

Balchunas had previously estimated that GBTC would need to lose approximately 25% of its outstanding shares before the outflows come to a halt.

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Adding to the complexity, Arkham Intelligence, a blockchain tracking firm, has cautioned against misinterpreting the GBTC transaction data displayed on its platform.

In a January 24th post, Arkham clarified that the outflow data for GBTC exhibited on its platform is divided between Coinbase Prime and new GBTC custody addresses.

Consequently, not all of the BTC being transferred from Grayscale’s Bitcoin Trust is necessarily being redeemed. This is due to the inherent structure of Bitcoin transactions, which often split outputs among multiple addresses.

Arkham further explained that “GBTC custody wallets frequently send to multiple addresses,” meaning that a portion of the BTC sent in a transaction might be directed to an address different from the main recipient indicated in the transaction panel.

In summary, while the recent slowdown in GBTC outflows provides a glimmer of hope for investors, it’s essential to approach the data with caution and consider the complexities of Bitcoin transactions, as highlighted by Arkham Intelligence.

The future trajectory of GBTC and its outflows remains uncertain, and investors will likely continue to monitor the situation closely.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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