March 27, 2024
Coinbase: Spot Bitcoin ETF Flows Trump Fundamentals in Crypto Market Focus
Bitcoin ETF

Coinbase: Spot Bitcoin ETF Flows Trump Fundamentals in Crypto Market Focus

The cryptocurrency market continues to be captivated by spot Bitcoin exchange-traded fund (ETF) flows, relegating fundamental factors to the background, according to a recent research report by Coinbase.

Despite the recent approval of these products, their first week saw net outflows, marking a significant shift in investor sentiment.

Spot Bitcoin ETF Outflows Accelerate

Coinbase’s research report revealed that between March 18 and March 21, net outflows from spot Bitcoin ETFs amounted to a staggering $836 million.

This accelerated outflow coincided with a dip in Bitcoin’s price, dropping below $63,000, before rebounding to approximately $66,800.

Of particular interest was the surge in outflows from the GBTC, totalling $1.83 billion over four days.

Analysts at Coinbase expressed uncertainty regarding the driving forces behind this sudden movement, noting that GBTC charges higher fees compared to other funds.

Speculation Surrounding Genesis Global’s Estate

One potential source of selling pressure identified by Coinbase is the bankruptcy estate of Genesis Global, responsible for the sale of 35.9 million GBTC shares.

This activity is separate from Genesis’s collateral pledge of 30.9 million shares to borrow $1.2 billion from Gemini Earn users in 2022.

Coinbase highlighted ongoing settlement discussions between Gemini and Genesis, anticipating payment in cryptocurrency within a few weeks, subject to court approval.

While the exact link between GBTC outflows and Genesis Global’s sales remains unclear, Coinbase emphasized the potential net neutral effect on Bitcoin’s performance.

Given that the majority of creditor payments will be made in cryptocurrency rather than cash, any market repercussions are expected to be mitigated over time.

Conclusion

The Coinbase report sheds light on the crypto market’s fixation with spot Bitcoin ETF flows, highlighting the recent trend of net outflows despite initial enthusiasm surrounding these products.

With uncertainties surrounding GBTC outflows and ongoing developments in Genesis Global’s bankruptcy proceedings, market participants remain attentive to potential impacts on Bitcoin’s performance.

As Coinbase suggests, the eventual resolution of these factors may contribute to a more balanced market outlook.

Image by Alpha Photo on Flickr

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