In a post dated January 22, crypto analytics platform Lookonchain reported that Grayscale has sold approximately 52,227 BTC, amounting to $2.14 billion. This reduction in Bitcoin holdings comes in the wake of the recent approval by the U.S. Securities and Exchange Commission (SEC) for spot Bitcoin exchange-traded funds (ETFs) earlier this month.
Grayscale has shed 2.14 billion Dollars in BTC since the authorization of the ETF
As of the latest data, Grayscale’s Bitcoin holdings now stand at 566,973 BTC, valued at around $23.21 billion. For comparison, iShares (BlackRock) holds 33,431 BTC valued at $1.37 billion, Fidelity has 24,857 BTC worth $1.02 billion, and Bitwise’s holdings comprise 10,152 BTC, equivalent to approximately $415.6 million.
The significance of Grayscale’s move lies in the context of the SEC’s recent approvals for various spot Bitcoin ETFs on January 10. Major financial players, including ARK Invest, BlackRock, VanEck, WisdomTree, Fidelity, Invesco, Franklin Templeton, Bitwise, and Valkyrie, all received the regulatory nod. Grayscale Investments itself had obtained authorization in late November of the previous year to convert its $28 billion Bitcoin trust into the GBTC spot ETF, marking a transformative shift in the investment landscape.
Within the cryptocurrency community, there is active speculation about the reasons behind Grayscale’s decision to reduce its exposure to Bitcoin. Analysts suggest that the SEC’s approval of spot Bitcoin ETFs may have prompted Grayscale to strategically realign its assets, capitalizing on the growing institutional interest in the cryptocurrency sector.
Following the green light for the ETF, Grayscale has divested 2.14 billion Dollars in BTC
Over the years, Grayscale Bitcoin Trust (GBTC) has played a significant role in accumulating Bitcoin, mainly due to its unique approach of settling redemptions in USD rather than selling its BTC holdings. However, this strategy shifted with the introduction of Bitcoin spot ETFs.
Analysts point to two main reasons for the growing trend of investors withdrawing from GBTC. Firstly, Grayscale’s 1.5% annual management fee is notably higher than the fees charged by most ETF issuers. Secondly, the change in the pricing structure of GBTC shares has contributed to this shift. Many investors initially bought shares at a significant discount, peaking at 49% in January 2023. With the discount now nearly eliminated (standing at 0.27%), investors are choosing to exit their positions in search of more attractive or stable options.
This trend has led Grayscale to sell off its BTC holdings to meet redemption demands from departing investors. Nikolaos Panigirtzoglou, Managing Director of Global Markets Strategy at JP Morgan, highlighted in a LinkedIn post on January 19 that around $3 billion had been invested in GBTC in 2023 to take advantage of the discount to Net Asset Value (NAV). He noted that if the $3 billion estimate holds true, and considering $1.5 billion has already been withdrawn, an additional $1.5 billion could exit the Bitcoin space, potentially putting further pressure on Bitcoin prices in the coming weeks.
In the midst of these developments, the broader Bitcoin market is experiencing a lack of momentum. The current price of Bitcoin is $40,735, reflecting a 2.42% decline over the last 24 hours and a 6.8% decrease over the past month. Investors and market participants are closely monitoring these dynamics as the cryptocurrency investment landscape continues to evolve.
Grayscale’s notable sell-off, coupled with the prevailing market dynamics, introduces a critical discussion about the future valuation of Bitcoin and the strategic positioning of major institutional players within the ever-evolving cryptocurrency landscape.
The decision by Grayscale to divest a significant amount of Bitcoin raises inquiries into the broader implications for the digital asset market. As one of the largest cryptocurrency investment funds, Grayscale’s actions are closely scrutinized by market participants, institutional investors, and retail traders alike. The timing of this sell-off, following the SEC’s approval of spot Bitcoin ETFs, adds another layer of complexity to the narrative.