Bitcoin ETF Approval Leads to Massive BTC Shift by Grayscale: A Liquidity Threat?

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Following the approval of 11 spot Bitcoin ETFs, several firms are reshuffling their Bitcoin holdings, raising concerns of a potential sell-off or liquidation in the current complex market conditions. 

Grayscale’s Massive Bitcoin Transfer After Spot ETF Approval Casts Doubt

Grayscale Investments, notably, has moved thousands of Bitcoin to multiple addresses within 30 days, sparking speculation in the crypto community. The first day of the spot Bitcoin ETF saw strong trading volume, totaling $4.6 billion, but experts suggest Bitcoin inflows were lower than anticipated, with GBTC recording a $95 million outflow.

Ki Young Ju, the CEO of CryptoQuant, shared insights on Grayscale transferred 21,400 BTC, with Coinbase being one of the recipients, prompting questions about its impact on Grayscale’s Bitcoin Trust (GBTC) redemptions. In all of these dealings, Coinbase, among other addresses, received some of these transferred Bitcoins. Questions arise about the potential impact on redemptions of Grayscale’s Bitcoin Trust (GBTC).

Grayscale’s Bitcoin On-Chain Activity: Liquidation or Custody Moves

Grayscale Investments recently gained approval to convert GBTC into an active spot Bitcoin ETF, making history alongside 10 others after SEC approval ended a decade-long struggle for the ETF. Despite this move, Grayscale’s Bitcoin balance has shown a steady decline, with December 2023 marking the largest monthly outflow since at least August 2019.

Plus, the recent outflows from GBTC, totaling over $579 million in two days, raise the possibility of an additional 8,000 BTC shifting positions soon. While Bitcoin’s price dropped by 0.63% in the past 24 hours to $42,678.45, market experts remain optimistic about a potential Bitcoin rally as the spot ETF product becomes properly priced in.

The correlation between the Bitcoin transfer and the market dip has sparked discussions among market participants, who are closely monitoring the situation to understand the ETF’s strategy and its potential effects on Bitcoin’s liquidity and market stability. 

What do you think will raise the liquidity threat before Bitcoin Rally? Tell us.