Grayscale’s Move Weakens BTC Price: Why Is the Firm Selling Bitcoin Assets?

• Bitcoin (BTC) experienced significant selling pressure on Thursday, resulting in a 3.45% decline, dropping below $41,000.
• Renowned crypto analyst Scott Melker expressed concerns about Grayscale’s role in the market, emphasizing that the asset manager has not actively “dumped on the market.”
• Bloomberg’s senior ETF strategist, Eric Balchunas, drew attention to nine Bitcoin ETFs, highlighting a massive 34% increase from the previous day.

Bitcoin price faced selling pressure on Thursday following Grayscale’s BTC transfers: What’s happening?

Concerns Arise Over Grayscale’s Transfers

Bitcoin (BTC) faced significant selling pressure on Thursday, experiencing a 3.45% decline and dropping below $41,000. This drop pushed Bitcoin’s weekly losses over 10%, and the current BTC price is trading at $40,896 with a market cap of $805 billion.

Since the launch of spot Bitcoin ETFs last week, Grayscale Bitcoin Trust (GBTC) has witnessed substantial outflows. As a result, Grayscale needs to liquidate a significant amount of Bitcoin as part of its GBTC assets. So far, a total of $2.2 billion has been withdrawn from GBTC.

Renowned crypto analyst Scott Melker addressed concerns about Grayscale’s role in the market, emphasizing that the asset manager has not actively “dumped on the market.” Melker explained that Grayscale’s Bitcoin Trust (GBTC) sales started as individuals sold their GBTC assets, leading Grayscale to sell an equivalent amount of Bitcoin.

He clarified that this process is not malicious but rather a fundamental aspect related to Exchange Traded Fund (ETF) mechanics. Melker’s insights provide clarity on ongoing dynamics, connecting market movements between Grayscale and Bitcoin assets. However, these developments are contributing to downward selling pressure on BTC prices in recent days.

Bitcoin ETFs Show Healthy Developments

Since their launch, spot Bitcoin ETFs have seen healthy growth with various ETF offerings experiencing increased inflows. BlackRock’s spot Bitcoin ETF attracted over a billion in just four days. Notably, Bloomberg’s senior ETF strategist Eric Balchunas highlighted a significant 34% increase in nine Bitcoin ETFs compared to the previous day. Balchunas finds this trend interesting and notes that, typically, after exaggerated launches, one would expect daily volumes to decrease gradually post-launch.

However, ETFs have defied this pattern by unexpectedly experiencing an increase. While most ETFs have seen growth, Balchunas points out that the observed anomaly is not due to volatility, excluding Grayscale Bitcoin Trust (GBTC). Balchunas views this situation positively, expressing optimism about the performance of the Newborn Nine ETFs in the market. Bitcoin ETFs have surpassed Silver with $27.5 billion in assets.

Balchunas notes that the discount on Grayscale Bitcoin Trust (GBTC) has reversed, pulling back by 96 basis points, moving in the opposite direction. He suggests that this change could be attributed to selling pressure.