Bitcoin Price Rebounds Above $41,000 as Grayscale Outflows Slow

Despite slowing outflows from Grayscale's GBTC, analysts remain cautious amid ongoing volatility.

In a notable turn of events, the price of Bitcoin made a recovery, surpassing the $41,000 mark today, while the outflows from Grayscale's GBTC saw a decreasing trend for the third consecutive day.

According to data from BitMEX Research, GBTC experienced outflows amounting to $394.1 million on January 25, marking a decline from $429.3 million on Wednesday and $515.3 million on Tuesday. Although GBTC outflows remain relatively high, the recent figure is the second-lowest since the inception of spot bitcoin ETFs on January 11.

The newly launched spot bitcoin ETFs, including BlackRock's IBIT, Fidelity's FBTC, Bitwise's BITB, Ark 21Shares' ARKB, Invesco's BTCO, VanEck's HODL, Valkyrie's BRRR, Franklin Templeton's EZBC, and WisdomTree's BTCW, have yet to experience any daily outflows.

Yesterday, IBIT attracted the highest inflows, securing $170.7 million, followed by FBTC with $101 million and BITB with $20 million. However, despite total inflows of $314.30 million from the nine ETFs on Thursday, it was not sufficient to offset GBTC outflows, resulting in a net outflow of nearly $80 million.

Overall, since their launch, spot bitcoin ETFs have witnessed net inflows of $744.6 million, with the new entrants totaling $5.53 billion in inflows and GBTC registering total outflows of $4.79 billion.

Bitcoin is trading up 3% over the past 24 hours at $41,328. However, it had previously experienced a 20% drop from its peak of around $49,000 on the day spot bitcoin ETFs were launched to $38,600 on January 23.

The rise in Bitcoin above the $41,000 mark led to over $110 million in liquidations on centralized exchanges in the past 24 hours, with short positions contributing over $66 million in losses and long positions contributing around $44 million, according to Coinglass data.

The heightened volatility, which triggered liquidations of leveraged positions, has seen an increase in annualized Bitcoin volatility to 53.95%, up from around 42% at the beginning of January, according to The Block's data dashboard.

Analysts from JPMorgan, led by Nikolaos Panigirtzoglou, anticipate limited further downside for Bitcoin, attributing the recent price decline to profit-taking in GBTC, which they believe has largely concluded. However, they caution that if GBTC's 1.5% fee isn't reduced soon, ongoing outflows could occur, potentially causing the fund to lose market share to competitors with lower fees.

Despite the optimistic outlook, some market participants express skepticism, speculating that bitcoin may fall to "at least" $30,000 to $36,000 before finding a local bottom, emphasizing the importance of addressing ongoing volatility and macroeconomic uncertainties in the market.