Bitcoin spot ETF saw continuous net outflows for the first time last week, with a total outflow of over $888 million over five consecutive days. Coinbase reported on Saturday that the net outflows are still dominated by Grayscale’s GBTC, and the surge in outflows last week is likely due to liquidation from Genesis, possibly resulting from bankruptcy.
Regarding the net outflows of spot ETFs, Coinbase stated in its weekly report on the 23rd that the cryptocurrency market is still focused on the fund flow of Bitcoin spot ETFs rather than fundamentals, as net outflows occurred for the first time in two months. Among them, the outflow volume of GBTC from Grayscale accounted for the largest portion, with a total outflow of up to $1.83 billion between March 18 and March 21.
Although the exact reasons for the continuous net outflows cannot be determined at the moment, David Duong, the director of institutional research at Coinbase, believes that the selling pressure from GBTC is likely coming from the bankrupt crypto lending institution Genesis. The previous net inflows in the past few weeks were offset by the inflow of funds from other spot ETFs, indicating a certain capital rotation at that time.
The US bankruptcy court approved Genesis to liquidate its holdings of Grayscale Trust assets on February 14 to repay creditors, including the 35.93 million GBTC shares with a current value of over $2.2 billion. This has long been regarded as a known potential source of selling pressure on GBTC in the market. The Wall Street Journal reported on March 18 that an unfinished bankruptcy repayment plan supported by creditors may return 77% of customer assets in physical form.
In addition, Coinbase’s report also stated that the aforementioned 35.93 million shares of GBTC, along with 30.9 million shares borrowed by Genesis from 232,000 Gemini Earn users in the third quarter of 2022 as collateral for $1.2 billion, are separate. Gemini has recently reached a settlement with Genesis, which will return all assets in 100% physical form, with 97% to be paid within a few weeks. The settlement agreement is still pending court approval.
Coinbase pointed out that the views of its analysts are similar to those of Eric Balchunas, a senior ETF analyst at Bloomberg. Balchunas stated on Saturday that he believes the recent selling pressure on Bitcoin comes from other Bitcoin owners, not spot ETFs.
As for the fund flow of Bitcoin spot ETFs on Monday (25th), it also broke the trend of continuous net outflows last week. Sosovalue data shows a net inflow of $15.7 million on March 25. Bitcoin also briefly surged to $71,150 earlier this morning and is currently trading at $70,436, a 4.5% increase in the past 24 hours.