Despite continued outflows from spot Bitcoin exchange-traded funds, Bitcoin (BTC) rallied, dragging the rest of the market with it. The US government has taken steps to sell $131 million in BTC seized from Silk Road. Meanwhile, Terraform Labs goes bankrupt.
Spot Bitcoin ETFs are seeing outflows
- This week saw massive negative net inflows from the spot Bitcoin ETF market, largely driven by significant outflows from the Grayscale Bitcoin Trust (GBTC) as investors exited the project due to high fees.
- Notably, on January 24th, the spot Bitcoin ETF market recorded its largest intraday outflow since trading opened. The products recorded a cumulative negative net inflow of $159 million on the day, the ninth day of trading.
- Except GBTC, all other ETF products recorded inflows on January 24th. However, these inflows were not enough to offset outflows from GBTC, which amounted to a massive $429 million.
- On January 25, the tenth day of trading, these products also recorded another negative net inflow totaling $80 million. While other products like BlackRock's IBIT saw inflows, GBTC once again saw massive outflows.
- As of Jan. 25, the Grayscale ETF product recorded $394 million in outflows, outpacing $170 million in inflows from BlackRock's IBIT product and $101 million in inflows were wiped out by Fidelity's FBTC.
- Amid these outflows, a report earlier this week confirmed that Grayscale has sold 52,227 Bitcoin tokens worth $2.14 billion since the ETF approval. Data confirmed that Grayscale owned 566,973 BTC at the time, worth $23.21 billion.
- These sell-offs and outflows increased selling pressure on BTC and contributed to the ongoing downtrend. However, JPMorgan analysts highlighted on January 25 that GBTC sell-offs were slowing.
Alameda withdraws Grayscale case, financial transaction tax rises
- As these GBTC outflows continued, reports this week confirmed that Alameda Research, a sister company of FTX, has withdrawn its lawsuit against Grayscale, its executives and affiliates.
- Interestingly, private data also suggested that FTX had sold 22 million GBTC shares, a move that may have influenced the recent withdrawal of proceedings. FTX Token (FTT), the native token of the FTX ecosystem, rose 10% on these reports.
Asia joins the Bitcoin ETF discussion
- This week, Asia also took center stage in discussions surrounding spot Bitcoin ETFs, with the US taking the lead. Reports on January 22 suggest that Hong Kong could welcome the first spot BTC ETF products by mid-year.
- Shortly after this disclosure, it was confirmed that several asset managers in Asia, including Venture Smart Financial Holdings and Value Partners Group, have expressed interest in launching the product.
Bitwise Discloses ETF Wallet, SEC Delays Spot Ethereum ETF
- In the US, asset manager Bitwise became the first spot Bitcoin ETF manager to share the physical Bitcoin address of its ETF product. This move, praised by the crypto community, aimed to strengthen transparency.
- After the wallet was released, it received public donations, with a notable inflow of 0.00042069 BTC from an unidentified address. The address also received BRC-20 tokens, with total donations reaching $5,000.
- Meanwhile, the U.S. Securities and Exchange Commission this week postponed a decision on two spot Ethereum products, pushing back BlackRock's product filing to March and Grayscale's filing to May.
- Prior to these decisions by the regulator, Commissioner Hester Peirce claimed that the SEC would not take the same approach to spot applications for Ethereum ETFs as it did with Bitcoin products, noting that they had learned their lesson.
Bitcoin rallies around $42,000
- Despite bearish pressure due to outflows from spot Bitcoin ETF products, Bitcoin recorded a recovery over the week. BTC collapsed to a one-year low of $38,555 on January 23 after holding off bears at $40,000 for an extended period.
- The asset recovered shortly after this decline and rose 4.66% to $41,823 on January 26. Bitcoin eventually bounced back and held above $42,000 on January 27, reaching a 10-day high of $42,842. The rest of the market saw a similar bounce in response.
US government wants to dump BTC tokens
- As Bitcoin sought a full recovery from the recent downturn, concerns about a sell-off resurfaced as reports emerged of the US government's intention to sell $131 million worth of BTC discovered on Silk Road three years ago had been confiscated.
- This week there was also another development surrounding the defunct Silk Road marketplace. A market drug lord pleaded guilty to running an illegal drug network while keeping about $150 million in crypto proceeds.
Terraform Labs files for bankruptcy
- After nearly two years of implosion of the Terra ecosystem, Terraform Labs, the company behind the project, filed for Chapter 11 bankruptcy in the US this week amid legal battles in the country.
- Recall that crypto trading platform Crypto.com announced plans to delist Terra (LUNA) last week. Following Terraform Labs' bankruptcy filing, the exchange is also aiming to delist Terra Classic (LUNC).
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