FTX’s bankruptcy estate has executed a staggering sell-off of nearly $1 billion worth of Grayscale’s Bitcoin ETF [GBTC], unveiling critical insights into the recent outflows from the world’s largest BTC ETF with more than $28.6 billion in assets under management. The conversion of GBTC into an ETF has recorded massive investor withdrawals, with over $2 billion exiting the platform—a significant chunk represented by FTX’s estate liquidating 22 million shares.
Before this, Ark Invest liquidated its entire stash of the Grayscale Bitcoin Trust, worth $200 million, on December 28. The strategic maneuver was part of the firm’s ongoing efforts to recalibrate its fund weightings.
The approval of new spot Bitcoin ETFs marked a pivotal moment, propelling funds such as BlackRock and Fidelity to attract inflows while GBTC faced substantial capital outflows. This shift in investor sentiment has coincided with a dip in Bitcoin’s price following ETF approval, contradicting earlier optimistic predictions. The completion of FTX’s massive sell-off has the potential to alleviate some of the selling pressure in the market.
This isn’t the first time FTX has capitalized on GBTC price disparities. On the inaugural NYSE trading day of Grayscale’s ETF, the firm strategically leveraged its holdings, valued at $900 million, showcasing a knack for navigating the nuances of the crypto market. At that time, John Ray III, the CEO of FTX, stated that the primary objective of the bankruptcy estate was to optimize returns for creditors and release value that was being hindered by what he described as Grayscale’s self-dealing and improper redemption restriction.
FTX Sell-Off Sends Bitcoin on a Downward Spiral
As FTX’s crypto assets, managed by entities like Marex, underwent sale processes, the market witnessed another bombshell development. Alameda Research, a prominent player in the crypto space and the sister firm of FTX has dropped the lawsuit against Grayscale concerning fees. The implications of this lawsuit withdrawal are yet to unfold, but it adds an intriguing layer to the evolving dynamics between major market players.
Meanwhile, the withdrawals from GBTC had a lasting impact on the price of Bitcoin, causing it to trade below $40,000, with a nearly 7% loss in the past week. Despite this, some market participants remain hopeful that the selling pressure will stabilize once FTX completes the liquidation of its GBTC holdings.