What led the decline was the intensive selling of Grayscale Bitcoin Trust. According to the Wall Street Journal (WSJ), the amount of capital outflows detected in the fund since the 19th has reached 2 billion dollars. Although there are still more inflows of funds throughout the Bitcoin spot ETF, over time, the outflow of Grayscale seems to have exceeded the inflows of funds from the rest of the fund. Eric Balchunas, a senior ETF analyst at Bloomberg, explained, “On the 22nd alone, a total of 875 billion dollars of net outflow occurred.”
The reason why funds are missing from Grayscale is because of the demand for profit-taking. In the case of Grayscale funds, a fund that has invested bitcoin in the form of a trust for about 10 years has converted to ETFs. The assets before converting to ETFs were about $28 billion. At the time of the trust product, investors were not free to repurchase, so they could only recover their investments with a discount on their holding value. According to the WSJ, the discount rate once reached 50%. Under these circumstances, it is convincing to analyze that the demand for profit-taking from existing investors who entered low prices has been driven by the diversification of ETFs.
Even after the approval of the spot Bitcoin ETF, investors are still distrusting the future of virtual assets, which is also fueling the decline in Bitcoin prices. According to the results of Deutsche Bank’s survey of 2,000 people and released on the same day, 42% of respondents expected Bitcoin to disappear completely within a few years.
However, some argue that the current downward trend is only a short-term trend and will stabilize in the long run. The move is expected to stabilize price flows once asset management experts start to recommend Bitcoin as a product to customers. “The move to decline is entirely expected,” said Sylvia Yablonski, CEO of DeFinance ETF. “It is only a temporary sell-off that listens to the news and sells it out, and will regain her strong track in the near future.”
