The Grayscale Bitcoin Trust (GBTC) recently transferred a significant amount of Bitcoin to Coinbase Prime deposit addresses, according to data from blockchain analytics platform Arkham Intelligence. This move suggests that the fund may have been compelled to sell some of its Bitcoin despite declining share prices.

Cointelegraph noted that the Grayscale Bitcoin Trust is one of the largest single holders of Bitcoin worldwide. Until January 11, most trust investors could not redeem their shares for Bitcoin or a cash equivalent. However, the trust has been converted into an exchange-traded fund (ETF) since then.

Outflows Impact Bitcoin's Price and Stabilization Observed

Analysts argue that the outflows from the Grayscale Bitcoin Trust have impacted the price of Bitcoin, partly contributing to its recent decline, as per Trading View. Despite these outflows, Bitcoin's price seemed to stabilize during mid-day trading hours in the United States on January 16.

Authorized participants can now purchase shares from investors and redeem them for the cash equivalent of the Bitcoin these shares represent. This redemption process requires the trust to sell off BTC to fulfill these requests. Typically, this occurs when the price of GBTC is lower than the value of the BTC it owns.

On January 12, there was a significant transfer of $41 million from the trust to a Coinbase Prime wallet, raising speculations that it may have led to a sharp decline in Bitcoin's price that day.

Bloomberg analyst Eric Balchunas reported that the Grayscale Bitcoin Trust experienced outflows totaling $95.1 million on January 11 and $484.1 million on January 12. On the other hand, Bitcoin ETFs such as the iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund saw inflows of nearly $1.4 billion over the same period.

Despite the broader Bitcoin market facing losses during this period, the U.S. spot Bitcoin ETF market experienced net inflows of over $818 million in the first two days of trading after accounting for GBTC's outflows.

Continued Outflows Raise Concerns

On January 16, Arkham data revealed further outflows of $376 million BTC from the Grayscale Bitcoin Trust by 7:17 pm UT. These successive outflows raise concerns about their impact on Bitcoin's price in the short term.

Photo: Grayscale Website Screenshot