GBTC Outflows Jump to $1.8 Billion This Week, BTC Price Enters Consolidation?

The Grayscale Bitcoin ETF GBTC continues to bleed putting an overall dent on the Bitcoin ETF market. On Thursday, March 21, GBTC recorded yet another day of major outflows at $359 million. With this, the total outflows from the Grayscale Bitcoin fund have skyrocketed to $1.8 billion for this week. after a strong bounce back on Wednesday after the FOMC meeting, the Bitcoin price has once again entered consolidation.

The GBTC Outflows Create Price Pressure

After a strong start to March 2024, the Bitcoin ETF outflows have accelerated this week! On Thursday, March 21, the next outflows stood at $95 million as per data from Farside investors. While GBTC registered $358 million of net outflows, the BlackRock Bitcoin ETF IBIT registered $233 million of net inflows.

Renowned Bitcoin analyst Willy Woo has shed light on a notable discrepancy between exchange-traded funds (ETFs) and self-custody investors amid recent market fluctuations. Woo’s analysis reveals a significant disparity in investment behavior during the market downturn, particularly concerning outflows from ETFs and net inflows into the Bitcoin network.

During the initial dip, ETF investors exhibited a reactionary stance, withdrawing approximately $1.6 billion from ETFs. In contrast, the Bitcoin network witnessed total net inflows of $1.1 billion, indicating a substantial influx of capital from self-custody investors.

ETF investors showing they're noob. On the first dip ETFs did $1.6b of outflows while the #Bitcoin network received $1.1b of total net flows.

This means plenty of self custody investors bought the dip. pic.twitter.com/HCblYm5NLk

— Willy Woo (@woonomic) March 22, 2024

On the other hand, some market analysts continue to be bullish about Bitcoin ETFs noting that the GBTc outflow is a temporary phenomenon. These analysts believe that institutional buying has just begun and that more than $100 billion in Bitcoin ETFs could come over the next 1-2 years.

Will Bitcoin ETF Demand Recover?

CryptoQuant CEO Ki Young Ju states that the current deceleration in Bitcoin spot ETF netflows indicates a slowdown in demand for these investment vehicles. However, he suggests that this trend could potentially reverse if the price of Bitcoin approaches critical support levels.

Further insights provided by Ju highlight the behavior of new whales in the market, particularly those identified as ETF buyers. These new entrants have established a $56,000 on-chain cost basis, potentially influencing market dynamics.

In assessing historical data, Ju noted that corrections in bull markets typically entail a maximum drawdown of approximately 30%. Additionally, he identifies a maximum pain point of $51,000, suggesting a threshold at which market sentiment may shift significantly. Data from JPMorgan also suggests that Bitcoin is currently in the ‘overbought’ category and expects healthy correction ahead.

#Bitcoin spot ETF netflows are slowing.

Demand may rebound if the $BTC price approaches critical support levels.

New whales, mainly ETF buyers, have a $56K on-chain cost basis. Corrections typically entail a max drawdown of around 30% in bull markets, with a max pain of $51K. pic.twitter.com/vZCG4F0Gh5

— Ki Young Ju (@ki_young_ju) March 22, 2024