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Coinbase (COIN) research report revealed that the cryptocurrency market is currently focused on spot Bitcoin (BTC) exchange-traded funds (ETFs) flows rather than fundamental factors.
Crypto Market Tracks Spot Bitcoin ETF Flows Amid Net Outflows
The report, released Friday, highlighted the first week of net outflows for newly approved ETF products in two months.
Between March 18 and March 21, net outflows totaled $836 million, according to Coinbase.
The acceleration of outflows coincided with Bitcoin falling below the $61,000 level last week, but it has since recovered and is currently trading at around $70,600.
Analysts were surprised when outflows from Grayscale Bitcoin Trust (GBTC) reached a total of $1.83 billion in four days.
Coinbase noted that although positive inflows into other spot ETFs had previously offset outflows from GBTC, recent developments point to potential capital rotation, especially given GBTC's relatively higher fees.
One potential source of selling pressure highlighted by Coinbase is the bankruptcy estate of Genesis Global, which is reportedly preparing to sell 35.9 million GBTC shares.
In addition, Genesis pledged 30.9 million shares as collateral to borrow $1.2 billion from Gemini Earn users in the third quarter of 2022.
However, Gemini has agreed to a settlement with Genesis and the assets are expected to be returned in kind within a few weeks, pending court approval.
Despite these significant developments, Coinbase acknowledged that it remains unclear whether the recent outflows from GBTC are directly linked to these sales.
However, the report suggested that given the magnitude of changes in GBTC shares, there may be a correlation with Genesis' payment obligations.
*This is not investment advice.