Grayscale Bitcoin Trust ETF Transfers $376M in BTC as Price Stabilizes

• GBTC transferred 8,730 Bitcoins worth $376 million to Coinbase Prime on January 16, possibly due to share price declines.
• GBTC converted into an ETF, allowing redemptions for cash equivalents, leading to Bitcoin sales when GBTC price lagged behind Bitcoin’s value.
• Analysts suggest GBTC outflows may have contributed to recent Bitcoin price drops, but Bitcoin stabilized on January 16.

The Grayscale Bitcoin Trust (GBTC) made a transfer of 8,730 Bitcoins, valued at over $376 million, to Coinbase Prime deposit addresses on January 16.

This move comes amidst suggestions that the fund may have been compelled to sell some of its Bitcoin holdings as its share price experienced declines.

Reasons for Net Outflows

Grayscale’s GBTC has experienced net outflows in recent times as investors have opted to sell their holdings. Several factors contribute to this trend, including the removal of the discount to net asset value and the availability of lower fees at competing ETFs.

Last week, Grayscale sold 2,000 bitcoins as part of this ongoing shift, and the total has now risen to 11,000 bitcoins. These sales have caused GBTC’s holdings to drop below 610,000 BTC.

Some analysts have posited that the outflows from the trust have exerted downward pressure on Bitcoin’s price, potentially contributing to recent declines.

Prior to January 11, most GBTC investors could not redeem their shares for Bitcoin or a cash equivalent. However, on January 11, the trust underwent a transformation into an exchange-traded fund (ETF).

Under this new structure, authorized participants gained the ability to purchase shares from investors and redeem them for the cash equivalent of the underlying Bitcoin. In response, the trust is required to sell BTC to facilitate these redemptions. This typically occurs when GBTC’s price lags behind the value of the BTC it represents.

Arkham data reveals that on January 12, the trust transferred $41 million to a Coinbase Prime wallet, indicating potential BTC sales. Some traders speculated that this outflow may have contributed to a sharp price decline in Bitcoin that day.

Moreover, Bloomberg analyst Eric Balchunas reported that the Grayscale Bitcoin Trust experienced outflows of $95.1 million on January 11 and $484.1 million on January 12.

He also noted that other Bitcoin ETFs, such as the iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund, witnessed inflows of nearly $1.4 billion during these two days. After accounting for GBTC’s outflows, this suggests that the U.S. spot Bitcoin ETF market experienced net inflows exceeding $818 million in its first two days of trading, despite broader losses in the Bitcoin market during the same period.

Some traders attribute the outflows to GBTC’s relatively higher fees. The trust imposes a 1.5% management fee, which critics argue is higher than that of most competitors.