Bitcoin fell below $40,000 due to GBTC sales from bankrupt crypto exchange FTX and BTC deposits on Coinbase by spot BTC ETF issuer Grayscale.
Bitcoin (BTC) slipped almost 9% on January 22, trading at around $39,700 on trading venues such as Binance and Coinbase. The largest cryptocurrency likely saw a price drop due to outflows from Grayscale's Spot Bitcoin ETF, a fund built on the company's long-standing GBTC product.
BTC below $40,000 | Source: TradingView
GBTC is the largest spot BTC ETF in the US with over $20 billion in assets under management. The fund has seen daily outflows of up to $500 million since the Securities and Exchange Commission (SEC) approved exchange-traded funds that track spot Bitcoin prices, resulting in outflows of over $2.8 billion from GBTC.
Since these ETFs are based on real Bitcoin, Grayscale has also sent BTC to exchanges for liquidation and redemption. According to crypto.news, Grayscale deposited 52,227 BTC from its custodial wallets, worth an estimated $2.2 billion, into Coinbase Prime accounts. The company's GBTC Bitcoin is also held at Coinbase.
One major company leaving GBTC, as announced on January 22, is the defunct crypto exchange FTX. Under bankruptcy trustee and CEO John J. Ray III, FTX's estate sold millions of GBTC shares for $1 billion.
Additionally, FTX-affiliated crypto hedge fund Alameda Research has voluntarily dropped its lawsuit against Grayscale and its parent company, Digital Currency Group, which accused the pair of internal misconduct – the lawsuit sought to steal $9 billion in the to release names of FTX debtors.
Elsewhere, the SEC confirmed Nasdaq’s request for spot BTC ETF options. This type of derivatives allows traders to either speculate on or hedge against the volatility of an asset, potentially attracting more capital into Bitcoin ETFs.
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