- Major Bitcoin holder Grayscale has engaged in a significant sell-off of BTC.
- Over the past week, the price of Bitcoin has dropped from $46,200 to $40,756.
The flagship cryptocurrency, Bitcoin (BTC), is currently witnessing a downturn, with Grayscale, one of the largest holders of Bitcoin, engaging in a significant sell-off. This move has left investors and market analysts speculating about its reasons and potential impact on the global crypto market.
The catalyst for this development came after the U.S. Securities and Exchange Commission (SEC) approved all 11 Spot Bitcoin ETFs. Following the approval, Grayscale, known for its Bitcoin Trust (GBTC), began transferring substantial amounts of Bitcoin to various addresses, including crypto exchanges, over the past week.
Historically, GBTC would redeem its shares by offering investors the equivalent USD value without directly selling the Bitcoin. However, with the approval of Bitcoin ETFs, investors are now withdrawing due to two main factors. As per crypto analysts Ash Crypto, Grayscale’s high 1.5% annual fee and the opportunity for those who bought at a 40% discount to exit as the discount narrows to 0%. So, Grayscale needs to sell an equivalent amount of Bitcoin, and it’s a standard part of how ETFs operate—nothing suspicious.
Since January 12, Grayscale has moved nearly $2 billion worth of BTC to various accounts, including the Coinbase exchange.
Will BTC Selling Pressure Stop?
The consequence of this mass withdrawal is the compelled sale of Bitcoin by GBTC to repay its investors, triggering the current market sell-off. Bitcoin’s price was suddenly downturned, dropping from $46,200 to just above $42,000. Even BTC declined to the range of $40,756 as of today, breaking a strong support line at $42,000.
The uncertainty surrounding this raises questions among market participants about when this selling pressure will stop. The process is expected to take a few weeks, during which BTC’s price may experience sideways movement or even a further decline.
As investors navigate this transitional period, analysts anticipate reallocating funds from GBTC to other ETFs with lower management fees. This shift is crucial for the Bitcoin market and could lead to temporary fluctuations in Bitcoin’s price.
In the meantime, the total trading volume for the 11 spot Bitcoin ETFs has surpassed $12.7 billion as of Jan18. Over 90% of all spot Bitcoin ETF trading is concentrated in the top three funds by volume, offered by Grayscale, BlackRock, and Fidelity.
