Grayscale Transfers Over $400 Million in BTC to Coinbase Sparks Bitcoin Drop Below $69,000

Bitcoin today experienced a drop, falling below its recent all-time high to under $69,000 per coin.

The largest digital coin by market cap has since recovered and is now back above $70,000 at the time of this writing. However, it remains below the $73,700 level it reached yesterday, as reported by CoinGecko.

The surge in Bitcoin’s value was attributed to the success of new spot Bitcoin exchange-traded funds (ETFs). Nonetheless, data released on Thursday from the Labor Department’s Bureau of Labor Statistics revealed a 0.6% increase in the producer price index last month.

This crucial inflation indicator indicated higher prices than anticipated in February. This data led traders to believe that the Federal Reserve may not reduce interest rates in May, resulting in a sell-off of digital assets and stocks.

Another influencing factor could be the transfer of around $400 million in Bitcoin by Grayscale to its custodian, Coinbase, as shown by Arkham Intelligence data today.

“I believe the inflation narrative is a contributing factor, but there may also be more Grayscale selling than usual—although we will have to wait until tomorrow to confirm,” stated an expert.

In January, the fund manager disposed of a significant amount of digital coins, with one instance involving the movement of $2.2 billion to the exchange within days, exerting downward pressure on the price.

Following the conversion of its fund into a Bitcoin exchange-traded fund (ETF) on January 10, Grayscale began transferring its BTC to Coinbase for selling.

Coinshares Head of Research, James Butterfill, noted that both these factors are contributing to the current situation.

Previously, Grayscale’s Bitcoin Fund functioned as a closed-end fund, requiring investors to hold their shares for at least six months. Now, as an ETF, investors are eager to redeem their holdings and reap profits, likely leading to further sell-offs.

Despite the redemptions from Grayscale, net inflows for the other nine ETFs surpassed $1 billion—a record—by Tuesday.

Edited by Ryan Ozawa.

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