The global cryptocurrency market has faced a considerable downturn, triggered by significant outflows from the Grayscale Bitcoin Trust (GBTC). The repercussions have reverberated across digital asset investment products in Europe and Canada.
According to the latest CoinShares Digital Asset Fund Flows Weekly Report, the past week witnessed a staggering $500 million in outflows from digital asset investment products. Notably, the United States, Switzerland, and Germany experienced the bulk of these outflows, amounting to $409 million, $60 million, and $32 million, respectively.
The decline in cryptocurrency prices can be attributed to substantial outflows from Grayscale, the incumbent ETF issuer in the US, totaling a staggering $5 billion since January 11, 2024. Despite this, there are signs that outflows from Grayscale are beginning to subside, with the daily total steadily decreasing over the week. In contrast, newly issued US ETFs managed to attract inflows of $1.8 billion last week, bringing the total net inflow, including Grayscale, to $807 million since their launch.
Bitcoin bore the brunt of the outflows, experiencing a $479 million reduction, while short-bitcoin funds saw additional inflows totaling $10.6 million. Altcoins, such as Ethereum, Polkadot, and Chainlink, faced outflows of $39 million, $0.7 million, and $0.6 million, respectively. On a brighter note, blockchain equities saw inflows totaling $17 million.
GBTC Outflows Begin To Slow
Meanwhile, Kaiko’s recent report further sheds light on the situation, highlighting that Bitcoin is rebounding as GBTC outflows slow down. Grayscale’s GBTC has witnessed significant outflows of approximately $5 billion since its conversion, with an average daily pace of nearly $500 million. Despite these outflows, GBTC still manages to hold $20 billion in assets.
Trade volumes and outflows have shown signs of slowing, providing much-needed support for Bitcoin. The recent market selloff is attributed to short-term factors such as forced selling on platforms like FTX and profit-taking by investors who capitalized on GBTC’s discount over the past two years.
However, uncertainties persist regarding the extent of new money entering the market versus rotation between different products. The mixed performance of BTC-linked stocks and investment vehicles since January 11 further adds complexity to the overall market dynamics.
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