A lot of cash has left major Bitcoin funds over the past seven days – which could explain the decline that BTC and most other digital assets suffered last week.
The good news? According to European digital asset manager CoinShares, outflows from the largest fund Grayscale are now slowing.
Since the product converted to an exchange-traded fund (ETF) earlier this month, investors have been quick to redeem their Grayscale holdings. This caused the price of Bitcoin (BTC) to fall sharply as the fund moved its cryptocurrency to its custodian Coinbase.
“Grayscale outflows totaled $2.2 billion last week, although data suggests that outflows are gradually tapering off as the daily total continued to decline throughout the week,” the CoinShares report said.
It added that investors withdrew over $500 million from major crypto fund managers such as Bitwise, Fidelity, Grayscale, ProShares and 21Shares. The focus was on BTC.
But despite the flow of money from these large funds, a lot of money flowed into the newly created Bitcoin ETFs in the States. “In stark contrast, newly launched U.S. ETFs saw inflows totaling $1.8 billion last week and have recorded $5.94 billion in inflows since their launch on January 11, 2024,” it said in the report.
The historic approval and subsequent trading of 10 BTC ETFs on Wall Street has seen investors flock to the products. The rush is partly due to pent-up demand. Before final approval, US regulators blocked the creation of spot Bitcoin ETFs for a decade.
But despite the interest in the investment vehicles – which give people access to the largest digital asset in a safe and regulated way – the price of BTC has not really changed.
Following news of the approval, the price rose quickly before tumbling as investors pulled money out of Grayscale. Before Grayscale became an ETF, investors had to hold their shares for at least six months before selling them. The blocking policy was at the center of a recently dropped lawsuit by insolvent crypto exchange FTX, which is trying to boost its cash reserves.
According to CoinGecko, BTC is currently trading at $41,872 per coin, having since recovered somewhat, rising more than 2% over the week. It hasn't moved in the last 30 days.
Edited by Stacy Elliott.
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