Since the approval of the Bitcoin spot ETF by the US Securities and Exchange Commission (SEC), the price of Bitcoin has significantly dropped from a high of $48,969 on the 11th to around $41,500 currently. This is believed to be mainly due to the continuous outflow of funds from the Grayscale Bitcoin Trust (GBTC), which has transformed into a Bitcoin spot ETF and is experiencing a near-zero premium. According to data from BitMEX Research, the total outflow from GBTC in the first 6 trading days after its transformation reached $2.8 billion, with $95.1 million on the first day, $484.1 million on the second day, $594.4 million on the third day, $460.6 million on the fourth day, $582.3 million on the fifth day, and $590.4 million on the sixth day.
While some market participants believe that one reason for the sell-off of GBTC may be its high management fee of 1.5%, Bloomberg analyst Eric Balchunas believes that only around 10% of the funds from GBTC may flow into other ETFs, which is much less than expected. However, considering that GBTC is currently the largest Bitcoin ETF in the world, holding over $25 billion worth of Bitcoin, Ran Neuner, Co-founder and CEO of Onchain Capital, previously warned that Bitcoin could face a period of selling pressure. With $25 billion being a significant portion, even if only 20% is redeemed, it would still mean a $5 billion sell-off in the market.
Therefore, Chris J Terry, Chief Architect of BTCdata, believes that the price of Bitcoin will continue to remain flat or decline until the completion of GBTC’s liquidation. In the coming weeks, there could be up to $25 billion in sell-offs. The decision by Grayscale to maintain a management fee rate of 1.5% will be seen as the biggest strategic mistake in the history of cryptocurrency.
However, Galaxy Digital founder Mike Novogratz disagrees with Chris J Terry’s argument. He tweeted on the 21st that while people may sell GBTC, most of them will invest in other ETFs, with his favorite being the Invesco Galaxy Bitcoin ETF. In November last year, Mike Novogratz predicted that with the approval of the Bitcoin spot ETF, up to $10 billion in new capital would flow into Bitcoin ETFs in the first year, and the price of Bitcoin would reach a historical high of $69,000 in the bull market of 2021.
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