Grayscale Selling Bitcoin But This Meme Crypto Explodes 20%
Bitcoin (BTC) hit fresh lows for the year on Friday in the $40,200s, as concerns mount about Grayscale’s ongoing Bitcoin selling, but a meme crypto called Sponge ($SPONGE) has exploded another 20% higher.
Grayscale is selling Bitcoin as traders dump is Grayscale Bitcoin Trust (GBTC), which just converted into a spot Bitcoin ETF.
As per Arkham Intelligence, Grayscale held 621.85K BTC on the 1st of January 2024.
As of the 19th of January, it now holds just over 582K coins, nearly 40,000 less.
Traders are dumping GBTC for a few reasons.
Firstly, prior to becoming a spot Bitcoin ETF which can be redeemed 1:1 for physical Bitcoin or its cash equivalent, GBTC had at times been trading with a discount to net asset value of as much as 50%.
As per YCharts, this discount was nearly as big as 50% in early 2023.
Many traders thus bought GBTC over the last year to express a view that this discount would close.
Now that GBTC is a spot Bitcoin ETF, the discount has effectively closed to zero.
These traders have subsequently been taking profit.
Secondly, GBTC charges a management fee of 1.5% annually, way above most of its spot Bitcoin ETF competitors.
Investors are thus dumping GBTC in order to shift their funds into a Bitcoin ETF product with lower fees.
Spot Bitcoin ETF approval euphoria saw the Bitcoin price reach as high as $49,000 last Thursday.
But with Bitcoin dropping back to around $41,500, those warning of a “sell-the-fact” reaction appear to have been vindicated.
Grayscale’s selling of Bitcoin has certainly contributed to the dampening Bitcoin market sentiment over the course of the last week.
And Grayscale may continue selling Bitcoin as traders dump GBTC.
JP Morgan estimated in a research note on Friday that profit-taking flows of $1.5
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