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GBTC Outflows Show Signs of Stalling

Daily outflows from Grayscale's Bitcoin Trust (GBTC) have slowed down, offering hope that the extensive Bitcoin selloff may be nearing its end. However, data interpretation challenges are highlighted by Arkham Intelligence.

Daily outflows from the Grayscale Bitcoin Trust (GBTC) have slowed down, sparking hope that the extensive Bitcoin selloff might be approaching its conclusion.

A Diminishing Exodus

Data from BitMEX Research reveals that on January 24, GBTC experienced outflows amounting to $429 million. This marks the smallest daily outflow since the launch of Grayscale's spot Bitcoin ETF on January 11, representing a 33% reduction compared to outflows on January 22.

Analyst's Insight

Eric Balchunas, an ETF analyst at Bloomberg, commented on this development on January 25, observing that GBTC outflows appear to be "seemingly trending down." However, he emphasized that the figure is still substantial. In previous statements, Balchunas had highlighted the presence of "too many unknowns" to predict when the "mass exodus" from GBTC might come to an end.

Cumulative Bitcoin Loss

Over nine trading days, GBTC has seen an outflow of 106,092 BTC, which is valued at approximately $4.4 billion. This substantial outflow of Bitcoin assets has garnered significant attention.

The Uncertain Outlook

While the slowing daily outflows are viewed as a positive sign, they do not guarantee that GBTC's Bitcoin exodus has concluded or is significantly decelerating. Balchunas had previously estimated that GBTC might need to lose approximately 25% of its outstanding shares before outflows abate.

Cautionary Note on Data Interpretation from Arkham

Arkham Intelligence, a blockchain tracking firm, has cautioned against potential misinterpretation of GBTC transaction data displayed on its platform. In a January 24 post, Arkham explained that the outflow data for GBTC on its platform is divided between Coinbase Prime and new GBTC custody addresses. This means that not all BTC moved from Grayscale's Bitcoin Trust is necessarily being redeemed. Due to the blockchain's input-output structure, Bitcoin transaction outputs are often split among multiple addresses, and GBTC custody wallets frequently send to multiple addresses. Consequently, some of the BTC sent in a transaction may be directed to a different address than the primary recipient indicated in the transaction panel.

The interpretation of GBTC outflow data remains a subject of scrutiny and vigilance among market participants.