As Bitcoin prices abruptly plunged on January 12th, the Grayscale Bitcoin Trust (GBTC) moved over $41 million worth of the cryptocurrency to various wallets and exchanges. This massive outflow of funds occurred just one day after GBTC-authorized participants gained the ability to redeem shares for actual Bitcoin holdings.
According to blockchain analytics platform Arkham Intelligence, Grayscale shifted 894 BTC worth $41 million to a Coinbase Prime deposit wallet on January 12th. Additionally, the trust sent 2,607 BTC valued at $119 million to other wallets lacking previous transaction histories. These two withdrawals represent approximately 0.6% of GBTC’s estimated $27 billion assets.
While Grayscale has never publicly disclosed its wallet addresses, Arkham believes the identified wallets belong to the trust. If accurate, this data indicates substantially greater outflows than the amounts detected. For instance, if 20% of GBTC’s holdings were redeemed, nearly $5 billion in sell pressure could hit the market.
Bitcoin Price Tanks As Outflows Occur
On the same day as Grayscale’s withdrawals, Bitcoin prices suddenly plunged from around $46,000 to slightly above $43,000. Currently, bitcoin is trading at $42,690, with 7% down within the last 24 hours.
Some social media speculation tied GBTC’s newly enabled redemptions to this price collapse. For example, trader Fomocap theorized that investors dumping $25 billion worth of GBTC shares triggered mass selling. Others highlighted how even the modest volumes detected might lead to sustained downward pressure.
One possible incentive for one versatile member of shareholders to stand behind GBTC’s coins is the, in reality, capricious low cost of its shares relative to the underlying BTC valuations. For example, in October, at some unspecified time, shares traded at a perilous 16% bargain to their web asset worth.
After extra Bitcoin-centered ETFs started trading on January 11th, authorized members gained the selection to cash out accrued GBTC shares for the raison d’etre variable for the real right 11th unique cryptocurrency. In any case, persevering because the key ranges of observed withdrawals hitherto comprise only an infrequent bite of complete assets. The lingering impacts stay as past day.
Related Reading | BlackRock CEO Praises Bitcoin As A Hedge Against Government Tyranny