Spot Bitcoin ETFs See Fourth Consecutive Day of Net Outflows, GBTC Bleeds $358M

The Grayscale Bitcoin Trust’s (GBTC) exchange-traded fund (ETF) experienced another day of significant outflows, with nearly $359 million exiting the fund on March 21. This follows a week of substantial outflows, with March 18 witnessing the largest single-day outflow of $642 million, according to data from Farside Investors. The latest figures bring the total outflows for GBTC this week to $1.8 billion, marking the fourth consecutive day of net outflows across all 10 Bitcoin ETFs.

Grayscale Outflows Might be Nearing End

Analysts believe that the trend of outflows from Grayscale’s fund may soon come to an end. Senior Bloomberg ETF analyst Eric Balchunas speculated that the majority of the outflows are a result of bankruptcies in the crypto industry and that the worst may be close to being over. Balchunas suggested that any outflows from Gemini or Genesis, two prominent players in the industry, are likely being used to buy Bitcoin, thereby supporting the market.“Takeaway: the worst is prob close to being over. Once it is, only retail will be left and flows should look more like the Feb trickle,” Balchunas wrote on X. 

The more I think about it the more likely the uptick in flows is related to the bankruptcies bc of the size and consistency. The flows in Feb showed what retail outflows look like, smaller and random pattern. Also any Gemini/Genisis outflows likely buying btc w cash hence market…

— Eric Balchunas (@EricBalchunas) March 22, 2024

As of March 21, Grayscale reported that its Bitcoin Trust held $23.2 billion in assets under management. 

Since its conversion to an ETF on January 11, GBTC has shed a total of $13.6 billion. 

Independent researcher ErgoBTC noted that approximately $1.1 billion worth of recent GBTC outflows seem to be associated with bankrupt crypto lender Genesis. 

“Resulting activity volumes and timings of funds out of GBTC and into Genesis match pretty well,” Ergo said. 

“Simply there just aren’t that many 2k BTC txs per day so likely the GBTC outflows and Genesis inflows are related.”

Resulting activity volumes and timings of funds out of GBTC and into Genesis match pretty well.

Simply there just aren’t that many 2k BTC txs per day so likely the GBTC outflows and Genesis inflows are related.

— ∴FreeSamourai∴ (@ErgoBTC) March 21, 2024

The timing and volume of the outflows align with Genesis’ activity, suggesting a correlation between the two.

In February, Genesis received court approval to liquidate $1.3 billion worth of GBTC shares to repay its creditors. 

Prior to that, bankrupt exchange FTX sold 22 million GBTC shares, valued at nearly $1 billion, completely liquidating its holdings.

Bernstein Expects Bitcoin to Surge to $90,000

Despite the recent slide in Bitcoin prices, investment firm Bernstein has raised its year-end forecast for the cryptocurrency. In a research note, Bernstein revised its price target for bitcoin to $90,000, up from the previous projection of $80,000. The firm also expressed optimism about cryptocurrency mining stocks, citing bitcoin’s recent rise to around $74,000 and the positive response to new spot BTC ETFs.Analysts Gautam Chhugani and Mahika Sapra from Bernstein highlighted several factors contributing to their positive outlook. They mentioned the start of a new Bitcoin bull cycle, strong inflows into ETFs, aggressive expansion of miner capacity, and record-high revenues for miners. These factors make Bitcoin miners an attractive investment option for equity investors seeking exposure to the cryptocurrency market.Additionally, Bernstein adjusted its forecast for the upcoming halving event in April. They now expect a 7% decrease in the hash rate, which represents the computational power required for bitcoin mining. This revision is a more optimistic outlook compared to their previous forecast of a 15% decline, as they anticipate fewer shutdowns and consolidation within the industry.