Bitcoin (BTC) is currently grappling with a crucial test of resilience as its price dropped below the $39,000 mark.
This precarious position has been influenced by several factors, primarily the increased Bitcoin sales by Grayscale Bitcoin Trust (GBTC), as it transitions to a spot Bitcoin exchange-traded fund (ETF).
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According to data from BitDegree, in the last 24 hours, Bitcoin's valuation dipped by almost 5% to a six-week low of $38,785, signaling a period of uncertainty and sell-side pressure.
The transition of GBTC to a spot ETF has significantly contributed to this trend. On January 22nd, the trust reported outflows totaling 19,250 BTC, equivalent to about $785 million.
Galaxy's head of research, Alex Thorn, estimated the outflows to be around $700 million. These large-scale withdrawals have raised concerns among market analysts and investors alike.
Eric Balchunas, a Bloomberg Intelligence ETF analyst, commented on the potential impact of these sales, noting that such volumes, particularly in transactions to custodian Coinbase, might be overwhelming for other ETF players in the market.
Despite these challenges, the new spot ETF sector is showing some positive signs, with net inflows still being recorded. GBTC, for instance, still holds over $20 billion in assets, and its share price closely aligns with the BTC spot price, showing only a 0.27% discount as of January 19th.
Bitcoin's struggle to maintain the $40,000 mark amidst Grayscale's ETF transition and increased outflows presents a critical juncture for the cryptocurrency, with implications for both institutional and retail investors.
