Bitcoin faced a notable price decline amidst ongoing outflows from Grayscale’s transformed GBTC spot Bitcoin ETF. CoinMarketCap data indicates that the leading cryptocurrency fell to as low as $60,800 on Tuesday, marking a 17% drop from its recent peak.
The downturn in Bitcoin’s price followed a significant outflow of $643 million from the $25 billion Grayscale Bitcoin Trust (GBTC) on Monday, representing its highest outflow since transitioning into an ETF on January 11. On Tuesday, these outflows continued, with net outflows totaling $326.2 million, with GBTC experiencing an outflow of $443 million.
In contrast, BlackRock and Fidelity’s ETF products recorded modest inflows of $75.2 million and $39.6 million, respectively.
Amidst the market turbulence, CoinGlass data reveals that over $650 million in losses were incurred by long and short traders across major centralized exchanges in the past 24 hours. Approximately 189,935 traders were liquidated, with total long liquidations reaching $491 million and short liquidations totaling around $165 million. Notably, OKX, Binance, and Bybit accounted for the majority of these liquidations.
Bitcoin-tracked futures witnessed $229 million in both short and long liquidations, while Ethereum-linked futures saw over $157 million in liquidations.
The recent outflows from GBTC suggest a shift in investor sentiment and a more cautious approach. One contributing factor could be the impending Federal Reserve decision scheduled for Wednesday, with concerns lingering over potential future rate cuts in response to persistent inflation.
In response to the significant outflows, Grayscale plans to gradually reduce fees on its flagship product, GBTC. CEO Michael Sonnenshein anticipates fee reductions in the coming months as the crypto ETF market matures. Sonnenshein noted that fees tend to be higher for new products initially, but as the market evolves, fees for GBTC are expected to decrease.
Since its transformation into an ETF in January, GBTC has seen outflows exceeding $12 billion, with investors capitalizing on profits and arbitragers exiting the fund. Sonnenshein acknowledged that outflows were expected as investors adjusted their positions, potentially influenced by factors such as the insolvency of cryptocurrency giant FTX, which reportedly sold off the majority of its GBTC shares.
