Outflows from Bitcoin ETFs, Developments in Silk Road Case, and Terraform Updates

Bitcoin (BTC) sparked a turnaround, pulling the broader market up with it, even as continuous withdrawals from direct Bitcoin exchange-traded funds were observed. In the midst of this, the U.S. authorities moved to auction off $131 million worth of BTC seized from Silk Road, and Terraform Labs declared bankruptcy.

Outflows hit direct Bitcoin ETF investments

• This particular week saw significantly negative flows from direct Bitcoin ETFs, driven mainly by sizeable redemptions from the Grayscale Bitcoin Trust (GBTC), with investors pulling back due to elevated fees.

• Specifically, on January 24, these direct Bitcoin ETFs experienced record-breaking withdrawals, with negative net flows reaching $159 million on their ninth trading day.

• Whereas other ETF offerings saw positive flows on the same day, they couldn’t offset the major $429 million GBTC withdrawals.

• Continuing the trend, on January 25, which was the tenth trading day, an additional $80 million in net outflows was documented. Despite inflows into products like BlackRock’s IBIT, GBTC faced significant redemptions once again.

• GBTC’s outflows totaled $394 million for the day, undermining the notable $170 million inflows to BlackRock’s IBIT and $101 million to Fidelity’s FBTC.

• An early-week report revealed Grayscale’s disposal of 52,227 Bitcoin tokens, amounting to $2.14 billion since their ETF got the green light. At that time, Grayscale had 566,973 BTC — translated to $23.21 billion.

• The combination of these sales and the outflow dynamic bolstered selling momentum for BTC, yet on January 25, JPMorgan’s analysts highlighted a slowdown in GBTC-related sales.

Alameda retracts Grayscale lawsuit, FTT value climbs

• Amid continuing GBTC withdrawals, recent updates reported Alameda Research, an FTX affiliate, retracting its legal challenge against Grayscale and its connected firms.

• Data revealed that FTX liquidated 22 million GBTC shares, likely contributing to their legal case withdrawal. Concurrently, the FTX Token (FTT) experienced a 10% rise following this news.

Spotlight on Asia’s Bitcoin ETF market

• The latest buzz in the direct Bitcoin ETF space has Asia making headlines, alongside the established U.S. discourse. Hong Kong is reportedly aiming to launch its own direct BTC ETFs by mid-year.

• Subsequently, reports confirmed interest from Asian asset managers such as Venture Smart Financial Holdings and Value Partners Group in debuting these investment products.

Bitwise leads in openness, SEC’s Ethereum ETF decision deferred

• In a pioneering step for transparency, U.S.-based Bitwise is now the first to publicly disclose the Bitcoin addresses for its ETF holdings, earning praise from the cryptocurrency community.

• Subsequent to going public, the wallet began receiving Bitcoin donations, with one particular deposit of 0.00042069 BTC from an anonymous donor, alongside BRC-20 token contributions amounting to $5,000.

• The U.S. SEC, on the other hand, postponed decisions on two direct Ethereum ETF proposals, extending BlackRock’s review period until March and Grayscale’s application until May.

• Before these decisions were made, Hester Peirce, a commissioner at the SEC, expressed the agency’s different stance regarding the spot Ethereum ETF applications compared to its earlier Bitcoin ETF decisions, acknowledging lessons learned.

Bitcoin’s comeback to $42,000

• Contrasting the negative pressures of ETF outflows, Bitcoin displayed resilience by rallying later in the week. After defensively holding $40,000, BTC had slipped to an annual low at $38,555 on January 23 but recovered swiftly, escalating 4.66% to $41,823 by January 26. Bitcoin sustained its upward trajectory, parking above the $42,000 mark on January 27 and touching a 10-day peak at $42,842, sparking corresponding market climbs.

U.S. government plans sizable BTC liquidation

• While Bitcoin aimed to cement its recovery, new concerns emerged with the U.S. government’s upcoming sales plans for $131 million worth of confiscated BTC from Silk Road.

• Additionally, a drug kingpin from the now-defunct Silk Road faced justice this week, ceding roughly $150 million in cryptocurrencies after pleading guilty to running an illegal narcotics enterprise.

Terraform Labs seeks bankruptcy protection

• Approximately two years after the devastating collapse of the Terra ecosystem, its creator Terraform Labs opted to initiate Chapter 11 proceedings in the U.S., amidst its unfolding legal issues.
• Subsequent to the bankruptcy announcement by Terraform Labs, Crypto.com, a cryptocurrency trading platform, began preparations to remove Terra Classic (LUNC) from its listings, having declared its plan to delist Terra (LUNA) the preceding week.

Follow Us on Google News