Grayscale Investments sold more than $2.14 billion worth of Bitcoin after spot ETFs were approved by the SEC. The crypto analytics website Lookonchain reported on January 22 that since the SEC approved spot Bitcoin ETFs earlier this month, Grayscale’s holdings of Bitcoin have decreased by about 52,227 BTC, or $2.14 billion.
At present, Grayscale has 566,973 Bitcoin, which is worth $23.21 billion. On the other hand, Bitwise has 10,152 BTC, or $415.6 million, while iShares (BlackRock) owns 33,431 BTC, valued at $1.37 billion. Fidelity owns 24,857 BTC, worth $1.02 billion.
Grayscale’s decision is especially noteworthy in the context of the SEC’s recent round of approvals for different spot Bitcoin ETFs on January 10. The approval has been given to financial behemoths as Valkyrie, ARK Invest, BlackRock, VanEck, WisdomTree, Fidelity, Invesco, Franklin Templeton, and Bitwise. At the end of November of last year, Grayscale Investments itself received permission to convert its $28 billion Bitcoin trust into the GBTC spot ETF, which signaled a significant shift in the financial market.
The reasons Grayscale gave for lowering its exposure to Bitcoin are currently being debated within the bitcoin community. The approval of spot Bitcoin ETFs, according to analysts, may have encouraged Grayscale to strategically reallocate its assets by taking advantage of the increasing institutional interest in the cryptocurrency space.
GBTC has a history of being a significant Bitcoin accumulator, mostly because it settles redemptions in US dollars as opposed to selling its Bitcoin holdings. But after Bitcoin spot ETFs were introduced, this approach changed.
Two primary causes of investor withdrawals from GBTC are identified by analysts. First, compared to most ETF issuers, Grayscale charges an annual management fee of 1.5%, which is significantly higher. The modification to the GBTC share price structure is the second explanation.
At first, shares were purchased by many investors at a steep discount, which peaked in January 2023 at 49%. But as the discount is now almost gone, at 0.27%, these investors are selling their holdings in favor of more secure or profitable investments.
Due to this circumstance, Grayscale had to sell off its Bitcoin assets in order to meet the demands of its exiting investors for redemption. In a LinkedIn post on January 19, JP Morgan’s managing director of global markets strategy, Nikolaos Panigirtzoglou, stated that up to $3 billion had been invested in GBTC in 2023 in order to take advantage of the discount to NAV.
He said at the time that if the $3 billion estimate is accurate and $1.5 billion has already been removed from the Bitcoin market, an additional $1.5 billion could leave as well, which could put more pressure on Bitcoin prices in the coming weeks.
Despite these advancements, there appears to be little movement in the larger Bitcoin market. At $40,735 today, the price of Bitcoin has decreased by 2.42% in the last day and 6.8% in the last month.
In light of the ongoing market trends and Grayscale’s significant sell-off, there are concerns regarding the future price of Bitcoin and the positioning of key institutional players in the dynamic cryptocurrency space.
