Ethereum

Bitcoin

<p>The crypto market witnessed a spectacle last week, akin to watching a high-wire act where the star performer, <a href="https://www.cryptopolitan.com/exploring-the-factors-behind-bitcoin-plunge/" data-type="post" data-id="488857" rel="noopener noreferrer nofollow">Bitcoin</a>, take a literal fall from grace. After a recent trailblazing performance, where Bitcoin was at the stratosphere, reaching a new all-time high of $73,800, it plummeted to a jarring low of $60,760. This sudden descent was a significant drop of 16%, leaving market watchers and investors in a state of bewilderment. And now the spotlight turns to Grayscale, the giant behind the largest Bitcoin exchange-traded fund, and its role in this high-stakes drama.<a href="https://www.ft.com/content/10b65d40-2ae8-468c-ad0e-759e12298251" rel="noopener noreferrer nofollow" target="_blank"> </a></p>
<h2 class="wp-block-heading" id="a-torrent-of-outflows-and-the-grayscale-effect">A Torrent of Outflows and the Grayscale Effect</h2>
<p>As the curtain rose on this week, the crypto market saw reversal of fortunes for Bitcoin ETFs. Asset manager CoinShares threw light on a huge outflow of nearly $500 million from 11 freshly minted Bitcoin ETFs in just a span of two days. Grayscale saw an exodus of over $1 billion from its vaults.</p>
<p>Grayscale’s spot ETF not only set the stage but also played a huge role in the play. The company’s fee structure, pegged at 1.5%, contrasted sharply with its competitors who opted for more investor-friendly rates. While entities like BlackRock, Fidelity, and Ark Investment wooed the audience with reduced or even waived fees, Grayscale stuck to its guns, a move that now seems to have backfired. This disparity in fee structures steered investors towards alternatives, igniting a flight from Grayscale’s offerings.</p>
<p>The broader narrative of Bitcoin’s allure in 2023, fueled by the U.S. regulators’ nod to spot Bitcoin ETFs, witnessed a surge in investment flows. BlackRock’s ETF, in particular, broke records, garnering $10 billion at breakneck speed. Yet, Grayscale’s situation showed consistent outflows, culminating in a $12 billion withdrawal since its ETF received the regulatory green light.</p>
<h2 class="wp-block-heading" id="market-jitters-and-a-reality-check">Market Jitters and a Reality Check</h2>
<p>This week’s chaos also reflected deeper market sentiments. Analysts from K33 Research flagged an “overheated” market structure, indicative of a bubble on the brink. The report highlights a “slow bleed” across the crypto market, with Bitcoin’s price movements serving as a cautionary tale. After peaking, Bitcoin, along with other major cryptocurrencies like Ethereum and BNB, witnessed massive losses, causing investors to doubt the market’s sustainability.</p>
<p>The sharp contrast in inflows into new ETFs, juxtaposed with Grayscale’s outflows, shows a market at a crossroads. Grayscale’s recent performance, marked by a $642 million outflow in a single day, starkly highlighted investor sentiment and market dynamics. While the allure of Bitcoin ETFs remains undiminished, with a net positive flow of 27,000 BTC into these products, the gloomy outlook caused by Grayscale’s recent outflows cannot be ignored.</p>

How Grayscale’s spot ETF caused Bitcoin to plunge hard

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