Bitcoins dips below $40k amid BTC ETF selloffs
Bitcoin experienced a decline below the $40,000 mark as a result of sell-offs in GBTC from the insolvent crypto exchange FTX and the withdrawal of BTC deposits on Coinbase initiated by the spot BTC ETF issuer Grayscale. On January 22, Bitcoin (BTC) witnessed a nearly 9% decrease, with its value hovering around $39,700 on platforms like Binance and Coinbase. The primary reason for this depreciation in the cryptocurrency’s value is attributed to the outflows from Grayscale’s spot Bitcoin ETF, a fund that is based on the company’s longstanding GBTC product.
Crypto Clash: FTX's $1 Billion Windfall and the Surprising Twist in GBTC's Journey
GBTC stands out as the most prominent spot BTC ETF in the United States, boasting a substantial market presence with assets under management exceeding $20 billion. Since the Securities and Exchange Commission (SEC) greenlit exchange-traded funds tracking spot Bitcoin prices, GBTC has witnessed daily outflows reaching up to $500 million, resulting in a substantial withdrawal of over $2.8 billion from the fund.
Given that these ETFs are backed by actual Bitcoins, Grayscale has taken steps to send BTC to exchanges for the purposes of liquidation and redemption. According to crypto.news, Grayscale has deposited 52,227 BTC, valued at an estimated $2.2 billion, into Coinbase Prime accounts from its custodial wallets. Additionally, Grayscale’s GBTC Bitcoin holdings are also maintained with Coinbase.
A noteworthy departure from GBTC, disclosed on January 22, comes from the now-defunct crypto exchange FTX. Operating under the administration of bankruptcy administrator and CEO John J. Ray III, FTX’s estate has successfully sold millions of GBTC shares, generating $1 billion in revenue.
In a related development, the FTX-affiliated crypto hedge fund Alameda Research has voluntarily withdrawn its lawsuit against Grayscale and its parent company, Digital Currency Group. The lawsuit, which alleged internal malpractice, aimed to unseal $9 billion on behalf of FTX debtors.
On a different front, the SEC has acknowledged Nasdaq’s request for spot BTC ETF options. These derivatives provide traders with the opportunity to speculate on asset volatility or hedge against it, potentially attracting more capital into Bitcoin ETFs.
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