Crypto Market Remains Fixated on Spot Bitcoin ETF Flows Over Fundamentals: Coinbase
The crypto market continues to keep a close eye on the flow of spot bitcoin exchange-traded funds (ETFs) rather than focusing on fundamental factors, according to a research report by Coinbase. The report states that these recently approved ETF products experienced net outflows for the first time in two months.
Between March 18 and March 21, there were net outflows of $836 million, causing Bitcoin to dip below $63,000. However, it has since recovered and is now trading around $66,800. The report also highlights the significant outflows from the Grayscale Bitcoin Trust (GBTC), which amounted to $1.83 billion over four days, although the cause of this surge in outflows remains unclear.
Coinbase analysts suggest that the previous weeks’ positive inflows into other spot ETFs outweighed the outflows from GBTC, indicating possible capital rotation during that period. GBTC’s higher fees could have influenced this shift in capital.
One factor that could have driven selling pressure and contributed to the GBTC outflows is the bankruptcy estate of Genesis Global, which intends to sell 35.9 million GBTC shares. Additionally, Genesis pledged 30.9 million shares as collateral in order to borrow $1.2 billion from Gemini Earn users. However, Gemini has reached a settlement with Genesis to return these assets in kind, pending court approval.
The report acknowledges that the exact connection between the recent GBTC outflows and these sales is unclear. However, it suggests that the impact on Bitcoin performance should eventually be neutral, considering that most creditor payments will be made in cryptocurrency rather than cash.
Moving forward, the market will continue to monitor the flow of spot bitcoin ETFs, as these investment products play a significant role in shaping the crypto market and its performance.
Read more: Spot Bitcoin ETFs Could See $220B of Inflows in Next 3 Years: JMP Securities