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Grayscale’s Bitcoin ETF Faces Record Outflows Amid Crypto Market Turmoil, But Analysts Predict a Turnaround

Grayscale, a leading crypto asset manager, is experiencing a notable decline in investments in its Bitcoin exchange-traded fund (ETF), with recent data showing significant outflows.

On March 21, the Grayscale Bitcoin Trust (GBTC) reported outflows of $358.8 million.

This event comes on the heels of a record-breaking $642 million outflow on March 18, according to Farside Investors.

Over the past week, GBTC has seen a total of $1.8 billion in withdrawals, marking a trend of persistent outflows across the cryptocurrency ETF sector for four consecutive days.

Despite these significant outflows, experts believe this trend could be nearing its end.

Eric Balchunas, a Senior Bloomberg ETF analyst, suggested on March 21 that the majority of the outflows, particularly from the recent bankruptcies within the crypto industry, might be concluding due to their “size and consistency.” H

e further speculated that the outflows could be linked to bankrupt firms purchasing Bitcoin with cash, which could be stabilizing the market.

Balchunas optimistically noted that once this period is over, the market might only see retail-driven flows, similar to those observed in February.

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Adding to the discussion, an independent researcher known as ErgoBTC pointed out that around $1.1 billion of the recent GBTC outflows likely originated from Genesis, a bankrupt crypto lender.

The researcher highlighted the timing and volume of transactions between GBTC and Genesis as evidence of their correlation.

WhalePanda, a pseudonymous crypto market commentator, echoed this sentiment, referring to a statement from Genesis about returning assets to creditors by converting GBTC shares into Bitcoin.

The selling pressure on GBTC has been further amplified by major liquidations in the crypto industry.

On February 14, Genesis received court approval to liquidate its $1.3 billion in GBTC shares to repay creditors.

Additionally, the bankrupt cryptocurrency exchange FTX liquidated all of its 22 million GBTC shares, valued at nearly $1 billion, just a month earlier.

As of March 21, Grayscale reported its Bitcoin Trust holds assets under management worth $23.2 billion, despite a $13.6 billion reduction since its conversion to an ETF on January 11.

These developments reflect the volatile nature of the cryptocurrency market and the interconnectedness of its participants.

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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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