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Crypto Bulls Face $217M Loss Amid Grayscale Outflow Concerns

In the wake of apprehensions regarding Grayscale Bitcoin Trust (GBTC) outflows and the approval of spot Bitcoin exchange-traded funds (ETFs), crypto bulls have incurred losses amounting to $217 million over the past 24 hours. This decline in prices is attributed to the prevalent “sell-the-news” sentiment associated with the ETF approval.

There is growing concern that Grayscale, a crypto fund manager, is selling some of its Bitcoin holdings as investors withdraw from the Grayscale Bitcoin Trust (GBTC) ETF. Tracked wallets belonging to Grayscale, identified by analysis firm Arkham, revealed a movement of over $400 million worth of Bitcoin to custodian Coinbase Prime on Thursday, potentially indicating preparations for a forthcoming sale.

Bloomberg Intelligence analyst Eric Balchunas highlighted that GBTC shares transitioned to a 0.9% discount compared to their net asset value on Thursday, likely due to selling pressure.

While GBTC experiences net outflows, other recently approved Bitcoin ETFs are witnessing net inflows. BlackRock’s IBIT surpassed $1 billion in assets under management (AUM) on Wednesday.

The decline in Bitcoin’s value below $42,000 late Thursday, marking a 3.7% decrease since Thursday and a 15% drop from the December peak at $49,000, triggered a broader market retreat. Ethereum (ETH) fell 2.5%, Solana’s SOL dropped 6.5%, and Cardano’s ADA declined by 5%. However, BNB Chain’s BNB outperformed the market, rising by 0.6%, supported by launchpads on the closely linked Binance exchange.

This price drop resulted in significant losses for highly leveraged futures bets on higher prices, amounting to $217 million, with Bitcoin trades alone accounting for $88 million in liquidations. Liquidation occurs when an exchange forcibly closes a trader’s leveraged position due to a partial or total loss of the trader’s initial margin.

Some traders anticipate that the broader crypto markets will be range-bound in the short term, as mentioned in a note on Friday.

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