Key Points
- The Grayscale Bitcoin Trust (GBTC) experienced a dramatic reduction in outflows, dropping by almost 90%.
- Bitcoin’s price rebounded following the release of recent U.S. inflation data, introducing market volatility.
The Grayscale Bitcoin Trust (GBTC), a traded fund on the exchange, recently saw a significant decrease in outflows, hitting a record low that was almost 90% less than the previous day’s figure.
Bitcoin’s Market Reaction
This change coincided with a price rebound for Bitcoin, following the release of the latest inflation data from the United States, which brought volatility to the market.
On one day, GBTC saw outflows amounting to $17.5 million, a stark contrast to the $154.9 million recorded the day before, according to data from Farside.
The price of Bitcoin has increased by 2.08% in the last 24 hours, reaching a value of $70,542, as per CoinMarketCap. This rise followed a drop to lows of $67,482 after a report on the U.S. Consumer Price Index (CPI) for March showed an unexpected 3.5% year-on-year increase.
Optimism in the Crypto Industry
This led to worries that the U.S. Federal Reserve might delay further interest rate cuts. Despite this, cryptocurrency industry observers are hopeful that the slowdown in GBTC outflows, which have totalled $16 billion since the fund became a spot Bitcoin ETF in January, may be starting.
Thomas Fahrer, CEO of the crypto-focused reviews portal Apollo, asked his 41,500 X followers if the “GBTC selling [is] over?” He pointed out that the outflows on that day were about equal to 250 Bitcoin, a nearly 95% decrease from the start of the week.
Just days earlier, Grayscale saw outflows of 4,288 Bitcoin, totalling $303 million. The lowest previous outflow was on Feb. 26, amounting to $22.4 million, with the average daily outflow over four months being $257.8 million.
Among BTC ETFs, which include BlackRock IBIT, Fidelity FBTC, ARK’s ARKB, and Bitwise BITB, only these registered positive inflows on that day, according to Farside data.
FBTC led with an inflow of $76.3 million, its largest since April 5, bringing its total inflows to $8,043.2 billion. The collective net inflows into Bitcoin ETFs now stand at $12,494.5 billion.
The upcoming Bitcoin halving, expected around April 20, is another focal point for the market. The event will halve the Bitcoin block issuance rate from 6.25 coins per block to 3.125.
Halvings, which occur every four years, have historically led to a surge in Bitcoin’s price due to the reduced supply growth. With the current enthusiasm around spot Bitcoin ETFs, the market anticipates even greater demand, potentially intensifying the rally.
In a Bloomberg interview on April 9, Fred Thiel, CEO of Bitcoin mining firm Marathon Digital, suggested that recent spot Bitcoin ETF approvals have brought substantial capital into the market, thereby accelerating the market’s appreciation, which was typically anticipated after the halving of Bitcoin.
Bitcoin’s price has seen a more than 60% increase in the months leading to the halving, with experts indicating a continued bullish market driven mainly by growing demand rather than the halving’s supply cut.
Andras Kristof, CEO and co-founder of Galaxis, pointed out that if demand for the new ETFs is as great as it is now, it will just add to the daily buying pressure. Against the backdrop of reducing supply, this could result in a significant spike in bitcoin price and volatility.
He suggested that the halving effect could likely attract institutional investors from the sidelines as they succumb to the fear of missing out.
