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BTC worth $2.14b sold by Grayscale after ETF approval

According to recent reports, Grayscale has sold off approximately $2.14 billion in BTC following the approval of its ETF. This information was shared in a post on Crypto News' website, which featured an image from the event.

According to crypto.news, Grayscale Investments has successfully sold $2.14 billion worth of BTC after the Securities and Exchange Commission (SEC) gave approval for spot Bitcoin ETFs.

As reported by Lookonchain, a crypto analytics platform, Grayscale's Bitcoin reserves have decreased by approximately 52,227 BTC, which is equivalent to $2.14 billion, following the SEC's recent authorization of spot Bitcoin ETFs earlier this month on Jan. 22.

The current holdings of Grayscale consist of 566,973 BTC, amounting to a total value of $23.21 billion. In comparison, iShares (BlackRock) holds 33,431 BTC worth $1.37 billion, while Fidelity's holdings of 24,857 BTC are valued at $1.02 billion. Bitwise also has 10,152 BTC in their portfolio, which is equivalent to $415.6 million.

In light of the recent SEC approvals for various spot Bitcoin ETFs on January 10th, Grayscale's decision is notable. Major financial institutions such as ARK Invest, BlackRock, VanEck, WisdomTree, Fidelity, Invesco, Franklin Templeton, Bitwise, and Valkyrie have all received approval. In November of last year, Grayscale Investments was also given permission to convert its Bitcoin trust, worth $28 billion, into a GBTC spot ETF, marking a significant shift in the investment market.

There is currently a discussion among members of the cryptocurrency community regarding Grayscale's decision to decrease its investment in Bitcoin. According to analysts, the recent approval of spot Bitcoin ETFs may have played a role in Grayscale's strategic restructuring of its assets, taking advantage of the increasing institutional interest in the cryptocurrency industry.

According to the CEO of Grayscale, it is unlikely that majority of spot Bitcoin ETFs will thrive in the market. This information was shared in an article published by Crypto News.

Throughout its history, GBTC has been a significant holder of Bitcoin, mainly because it chooses to pay out redemptions in USD rather than selling off its BTC assets. However, this approach changed after the introduction of Bitcoin spot ETFs.

According to analysts, there are two primary factors driving investors to pull out of GBTC. The first is Grayscale's annual management fee of 1.5%, which is significantly higher compared to other ETF issuers. The second reason is the alteration in the pricing arrangement of GBTC stocks.

Initially, a large number of investors purchased stocks at a considerable discount, reaching its highest point of 49% in January 2023. Nevertheless, as the discount has dwindled to only 0.27%, these investors are now selling their holdings in pursuit of more profitable or reliable alternatives.

The company Grayscale has sold $2.14 billion worth of BTC since the approval of ETF. A chart from YCharts shows the three-year discount or premium of GBTC. [Source: YCharts] (https://ycharts.com/companies/GBTC/discount_or_premium_to_nav)

The current circumstance has resulted in Grayscale having to liquidate their BTC assets in order to meet the redemption requests from investors who are leaving. On January 19, in a post on LinkedIn, Nikolaos Panigirtzoglou, the managing director of global markets strategy at JP Morgan, pointed out that an amount of up to $3 billion was put into GBTC in 2023 to take advantage of the NAV discount.

During that period, he also mentioned that in case the estimated amount of $3 billion remains accurate, and with $1.5 billion already taken out, another $1.5 billion might leave the Bitcoin market. This could potentially add to the downward trend of Bitcoin prices in the coming weeks.

In the midst of these advancements, the overall Bitcoin market is displaying a lack of drive. As of now, the value of Bitcoin is at $40,735, indicating a 2.42% drop in the last 24 hours and a 6.8% decrease in the past month.

According to a recent report, Grayscale has sold $2.14 billion worth of BTC since the approval of the ETF. The 24-hour price chart for BTC can be seen below. Source: CoinMarketCap.

The significant decline in Grayscale's value, along with current market patterns, brings up concerns about the future worth of Bitcoin and the strategies that prominent institutional investors will adopt in the ever-changing world of cryptocurrency.