- The outflows from Grayscale were greater than the net inflows into other spot ETFs.
- The management fees charged by Grayscale were the highest of any ETF issuer.
Bitcoin [BTC] fell below $41,000 for the first time in six weeks as the widely expected endorsement of the ETFs after the party’s mockery turned out to be a flop.
The king coin fell to $40,761 at 05:00 UTC on January 22, AMBCrypto noted using CoinMarketCap data. As traders bought the dip, the price was pulled back up to $41,202 at the time of writing.
Source: CoinMarketCap
Grayscale liquidations are pulling BTC down
The outflow of billions worth of Bitcoins from the Grayscale Bitcoin Trust (GBTC), which has transitioned to a spot ETF, was the main bearish catalyst, as AMBCrypto previously reported.
Whereas Grayscale still had over 566,000 Bitcoins in custody at the time of writing, there were still concerns about prolonged bearish conditions.
Noted Bitcoin analyst Chris J Terry stated that until all remaining Bitcoin, worth approximately $25 billion, is liquidated, the value of the king coin would continue to move sideways or decline.
Terry criticized Grayscale’s strategies, saying:
“Grayscale decides to keep ETF fess of 1.5% will go down as the biggest strategic mistake in history cryptocurrency history.”
High costs that cause disappointment?
Indeed, the management fees charged by Grayscale were the highest of any ETF issuer. Most approved ETFs have fees between 0.2% and 0.4%.
However, Grayscale has defended the high fees it charged. In a recent interview with CNBCsaid Michael Sonnenshein, CEO of Grayscale Investments:
“Investors are heavily weighing things like liquidity and track record and who the actual issuer behind the product is. Grayscale is a crypto specialist. And it really paved the way for a lot of these products.”
Increase rotation to other ETFs?
However, not everyone believed the story that all GBTC interests would be sold.
Remarkable, Mike Novogratz, the CEO of Galaxy Digital, disagreed with Terry’s arguments. He expressed:
“While I think people will sell GBTC, I think most will switch to other ETFs. This indigestion will end and BTC will be higher in six months.”
Read Bitcoin’s [BTC] Price forecast 2024-25
However, as things stood at the time of writing, net inflows into other ETFs were less than outflows from GBTC, AMBCrypto found using CryptoQuant data.
Source: CryptoQuant
It remains to be seen how Bitcoin negotiates the downside pressure in the near-to-short term. As AMBCrypto previously reported, billions in capital injections into the market were expected in the long term.