Bitcoin (BTC) experienced a decline of more than 3% from its highest point in 24 hours as investors in Grayscale’s Bitcoin exchange-traded fund (ETF) withdrew $598.9 million from the fund on February 29th. This marks the second-largest net outflow in the fund’s history.
On February 29th, Bitcoin reached a high of $63,585 before dropping by approximately 3.3% to just below $61,500, according to Cointelegraph Markets Pro.
The Grayscale Bitcoin Trust (GBTC), which recently converted into an ETF, recorded daily net outflows of $600 million on February 29th, according to preliminary data from Farside Investor. This is second only to the record net outflow of $640.5 million on January 22nd.
Bloomberg senior ETF analyst Eric Balchunas commented on the outflows, stating, “That’s a lot.” This comes just days after GBTC recorded a historically low daily net outflow of $22.4 million on February 26th.
On February 28th, the ten spot Bitcoin ETFs in the United States saw a combined record-high net inflow of $673.4 million as Bitcoin reached a two-year high of $64,000.
The recent outflows from GBTC could impact the day’s inflows. Full inflow data for the other nine ETFs is not currently available, but Farside’s February 29th data shows that Fidelity’s Bitcoin ETF, one of the largest funds by assets, generated only $44.8 million in net inflows, its fourth-lowest day of inflows.
Meanwhile, JPMorgan analysts have warned that the price of Bitcoin may fall after the “halving euphoria” subsides. The analysts noted that Bitcoin’s upcoming halving event in April, which many believe will drive up its price, could actually have the opposite effect and cause it to approach $42,000 instead.
The halving event reduces the Bitcoin block reward from 6.25 BTC to 3.125 BTC and is historically a catalyst for price rallies. However, the analysts predict that mining difficulty could be 20% lower than initially estimated, leading to lower production costs and a potential slide in Bitcoin’s price.
The analysts calculated the 20% drop in mining difficulty by assuming that miners with less efficient machines and limited funds for upgrades would stop mining as costs rise. This would decrease Bitcoin’s hash rate and mining difficulty.
However, the analysts acknowledged that the drop in mining difficulty may not occur if inefficient mining rigs remain profitable, especially due to demand from Bitcoin ETFs.
Overall, the recent outflows from Grayscale’s Bitcoin ETF and the potential impact of the halving event have raised questions about the future of Bitcoin and its price trajectory.