Crypto News– A new market report from Bitfinex suggests that a significant sell-off of Grayscale Bitcoin Trust exchange-traded fund (ETF) shares, partly driven by the bankrupt exchange FTX, had a substantial impact on Bitcoin’s recent price drop in January 2024.
The Departure of Grayscale GBTC Alters Bitcoin Market Dynamics
According to the latest market update from Bitfinex Alpha, the realization of profits following Grayscale’s successful conversion of its GBTC trust to an ETF was a significant influence on the marketwide correction that took BTC from $48,700 to $38,600 in a matter of days. Bitfinex head of derivatives Jag Kooner unpacked the finer details of the report in correspondence with Cointelegraph. Kooner emphasizes the significant “discount” afforded to GBTC investors as a primary driver for the high volume of share selling in recent weeks:
“The discount was over 50% during the bear market lows in late 2022, and it’s non-existent now because of arbitrage traders. This was one of the most expected results of spot ETFs rolling out, which means these investors have been waiting for a long time to realize these profits,” Kooner explains.
The report highlights $4.3 billion outflows following GBTC’s conversion to a spot Bitcoin ETF on Jan. 16. Conversely, the highest net inflows for an individual spot Bitcoin ETF were to BlackRock’s iShares Bitcoin Trust (IBIT), attracting $1.82 billion.
ETF Fee Battle Spurs FTX to Offload GBTC Shares
The Bitfinex report also points out that the conversion of Grayscale’s trust into a spot Bitcoin ETF paved the way for the sale of substantial shares held by the bankrupt cryptocurrency exchange FTX. FTX unloaded 22 million GBTC shares, totaling nearly $1 billion, effectively liquidating its holdings.
Another aspect emphasized by Bitfinex Alpha is the impact of fees associated with spot BTC ETFs. Kooner highlighted that Grayscale’s competitors currently impose fees ranging from 0.2% to 0.9%, whereas Grayscale charges 1.5%:
“This variance in fees has motivated investors to transfer their assets from GBTC to more cost-effective Bitcoin ETF alternatives. Moreover, several other ETF filings have waived fees for the initial year, further encouraging a shift away from GBTC to alternative products.”
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