Grayscale Bitcoin Trust (GBTC) outflows show signs of slowing, but uncertainty remains

Daily outflows from the Grayscale Bitcoin Trust (GBTC) have reached their lowest point since launch day, sparking hope of a potential end to the exodus. However, experts remain cautious as the situation unfolds.

Grayscale Bitcoin Trust outflows ease

Daily outflows from the Grayscale Bitcoin Trust (GBTC) have seen a notable slowdown for two consecutive days, with the data pointing to the smallest daily outflow since the launch of the Grayscale’s spot Bitcoin ETF. According to BitMEX Research GBTC outflows amounted to $429 million, representing a 33% decrease. 

This apparent reduction in outflows has led to optimism among some market observers that the ongoing multibillion-dollar Bitcoin selloff could be showing signs of abating.

Analysts remain cautious

Despite the recent slowing of outflows, Bloomberg ETF analyst Eric Balchunas has emphasized that GBTC’s outflows are still a substantial figure, albeit trending down. Balchunas noted that there are “too many unknowns” to determine when the “mass exodus” of GBTC will come to a halt. 

Over nine trading days, GBTC has witnessed an outflow of 106,092 BTC, equivalent to approximately $4.4 billion. Balchunas previously estimated that GBTC would lose around 25% of its outstanding shares before a potential end to the outflows.

Potential misinterpretation of data

Blockchain tracking firm Arkham Intelligence has issued a cautionary note regarding the interpretation of GBTC transaction data. According to Arkham, the outflow data for GBTC displayed on its platform is divided between Coinbase Prime and new GBTC custody addresses. 

This implies that not all of the BTC being transferred from Grayscale’s Bitcoin Trust is necessarily being redeemed. Arkham explained, “Due to the input-output structure of its blockchain, Bitcoin transaction outputs are often split amongst multiple addresses.

Arkham further elaborated that “GBTC custody wallets frequently send to multiple addresses,” resulting in some of the BTC sent in a transaction going to a different address than the one initially indicated in the transaction panel.

What lies ahead for GBTC?

As the GBTC outflow situation continues to evolve, investors and market participants are closely monitoring the developments. The potential slowing of outflows may provide some respite for GBTC, but the broader cryptocurrency market remains dynamic and unpredictable. 

Factors such as regulatory changes, market sentiment, and macroeconomic events could still impact the future of GBTC and its Bitcoin holdings.