Bitcoin Price Slides 3% as GBTC Records US$600M Outflow

On February 29, investors in Grayscale's spot Bitcoin exchange-traded fund (ETF) withdrew US$598.9 million, the second-largest net outflow on record. As a result, Bitcoin (BTC US$61,512) plummeted by almost 3% from its 24-hour peak.

In the cryptocurrency market, Bitcoin reached a 24-hour high of US$63,585 early on February 29 and has since fallen roughly 3.3% to a little under US$61,500, according to Cointelegraph Markets Pro.

It comes as the Grayscale Bitcoin Trust (GBTC), the asset managers' freshly converted ETF, suffered daily net outflows of US$600 million on February 29, according to preliminary Farside Investor statistics.

It trails only the ETF's record net outflow of US$640.5 million on January 22.

"That's a lot," Bloomberg senior ETF analyst Eric Balchunas said in a Feb. 29 X post on the day's outflows.

The near-record outflows came only days after GBTC reported a record-low daily net outflow of US$22.4 million on February 26.

On Wednesday, Feb. 28, the 10 US spot Bitcoin ETFs received a combined record-high net inflow of US$673.4 million, as Bitcoin reached a two-year high of US$64,000.

The new GBTC outflows may reduce the day's inflows. Full inflow data for the other nine ETFs is not yet available. Still, Farside's Feb. 29 data already shows Fidelity's Bitcoin ETF — one of the top three largest funds by assets — earning only US$44.8 million in net inflows, its fourth-lowest day of inflows.

Meanwhile, in a recent letter to investors, JPMorgan analysts warn that the price of Bitcoin may decrease as the "halving euphoria" fades.

Bitcoin's planned halving event in April, which many assume would drive up its price, might have the opposite impact, pushing it closer to US$42,000, according to analysts in a Feb. 29 letter viewed by Bloomberg.

The Bitcoin halving event reduces the Bitcoin block reward from 6.25 BTC to 3.125 BTC and has historically triggered Bitcoin price increases, as miner production costs often rise in the aftermath.

According to experts, production expenses, or the cost of mining one Bitcoin, are viewed as the lowest point at which Bitcoin's price can potentially fall, and should "mechanically double" to US$53,000 following the halving.

However, mining difficulty might be 20% lower than previously projected, lowering production costs and Bitcoin's price, perhaps causing the cryptocurrency to fall below US$42,000 during the April halving, according to the experts.

Analysts computed the additional 20% mining difficulty decrease by assuming that some miners with less efficient computers and little money to upgrade will shut down their rigs when operating expenses climb.

This would reduce Bitcoin's hash rate and mining difficulty by an estimated 20%, consistent with estimations given by Galaxy Digital last month.

The researchers recognized that a decrease in mining difficulty was unlikely since inefficient mining rigs may stay lucrative if Bitcoin's price remained high, particularly owing to demand from Bitcoin ETFs.