Bitcoin spot ETF saw consecutive net outflows for the first time last week, with a total outflow of over $888 million in 5 days. Coinbase reported on Saturday that the net outflows were still dominated by Grayscale’s GBTC, and the surge in outflows from GBTC last week was likely due to the bankruptcy liquidation of Genesis.
Regarding the phenomenon of net outflows from spot ETFs, Coinbase’s weekly report on the 23rd stated that the cryptocurrency market is still focused on the fund flow of Bitcoin spot ETFs rather than fundamentals, as net outflows occurred for the first time in two months. The largest outflow came from Grayscale’s GBTC, with a total outflow of $1.83 billion from March 18th to March 21st.
Although the exact reason for the consecutive net outflows cannot be determined at the moment, David Duong, Director of Institutional Research at Coinbase, believes that the sell-off by GBTC is likely due to the bankruptcy liquidation of Genesis, a failed cryptocurrency lending institution. The net inflows from other spot ETFs offset the outflows from GBTC in the previous weeks, indicating “a certain capital rotation” at that time.
The US bankruptcy court approved Genesis to liquidate its holdings of Grayscale Trust assets, including 35.93 million shares of GBTC, worth over $2.2 billion, to repay creditors on February 14th. This has long been seen as a known potential source of selling pressure on GBTC in the market. The Wall Street Journal reported on March 18th that an unfinished bankruptcy repayment plan supported by creditors could return 77% of customer assets in physical form.
In addition, Coinbase’s report also stated that the 35.93 million shares and the 30.9 million shares of GBTC borrowed by Genesis in the third quarter of 2022 as collateral for $1.2 billion from 232,000 Gemini Earn users are separate. Gemini has recently reached a settlement with Genesis, which will return all assets in 100% physical form, with 97% to be paid within weeks. The settlement agreement is still pending court approval.
Coinbase pointed out that the views of Coinbase analysts are similar to those of Eric Balchunas, a senior ETF analyst at Bloomberg. Balchunas stated on Saturday that he believes the recent selling pressure on Bitcoin comes from other Bitcoin owners, not spot ETFs.
As for the fund flow of Bitcoin spot ETFs on Monday (25th), it also broke the trend of consecutive net outflows from the previous week. Sosovalue data shows a net inflow of $15.7 million on March 25th.
Bitcoin also briefly surged to $71,150 this morning, and as of press time, it was temporarily reported at $70,436, a 4.5% increase in the past 24 hours.