Bitcoin’s value fell sharply, triggered by a record withdrawal from Grayscale’s ETF, the largest for cryptocurrency.
This event coincided with reduced expectations for Federal Reserve interest rate cuts. On Tuesday, Bitcoin’s price dropped 7.1%, reaching about $62,500 by midday in London.
Other significant cryptocurrencies like Ether, Solana, and Dogecoin also saw declines.
Bloomberg reports that the Grayscale Bitcoin Trust, worth $25 billion, saw $643 million withdrawn on Monday—its biggest withdrawal since it became an ETF on January 11.
This was a significant change, as strong demand for nine new Bitcoin ETFs had previously balanced out GBTC’s withdrawals.
Yet, investment flows into products by major players such as Fidelity Investments and BlackRock Inc. have decreased, with a combined net withdrawal of $154 million from the 10 ETFs on March 18.
QCP Capital, a cryptocurrency trading firm, indicated they would monitor ETF flow numbers closely, suggesting a net negative result would signal bearish trends.
The ETFs have attracted $12 billion in total since their start. This funding drove Bitcoin to a new high of $73,798 last week.
Nonetheless, the cryptocurrency’s value has faltered following a decline in initial demand and concerns over potential asset bubbles. Monetary policy uncertainties contribute to this volatility.
Inflation concerns are dampening hopes for a softer Federal Reserve policy, especially as Japan concludes its extensive monetary stimulus, eliminating the last of the world’s negative interest rates.
Grayscale’s ETF Experiences Unprecedented Withdrawal
Smaller cryptocurrencies have especially felt the impact of this downturn, with a 25% drop from this month’s high, wiping out much of this year’s gains.
Grayscale Investments LLC, managing GBTC, plans to introduce a similar fund with lower fees, competing against less expensive products.
This move, reported by Bloomberg, highlights the competitive landscape and the ongoing adjustments within the cryptocurrency investment space.