Bitcoin sees 3% correction as GBTC investors dump nearly $600M

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Bitcoin (BTC) fell over 3% from its 24-hour high as investors in Grayscale’s spot Bitcoin exchange-traded fund (ETF) dumped $598.9 million from the fund on Feb. 29 — its second-largest net outflow on record. 

Bitcoin hit a 24-hour high of $63,585 early on Feb. 29 and has since dropped around 3.3% to just under $61,500, according to Cointelegraph Markets Pro.

It comes as the Grayscale Bitcoin Trust (GBTC) — the asset managers recently converted ETF — saw daily net outflows close at $600 million on Feb. 29, per preliminary Farside Investor data.

Daily Bitcoin ETF flows with incomplete Feb. 29 data highlighted green. Source: Farside Investors

It’s behind only the record $640.5 million net outflow day the ETF had on Jan. 22.

“That’s a lot,” Bloomberg senior ETF analyst Eric Balchunas wrote in a Feb. 29 X post commenting on the day’s outflows.

The near-record outflows come only days after GBTC posted a historic low daily net outflow of $22.4 million on Feb. 26.

“Two steps forward one step back,” Balchunas added.

Source: Eric Balchunas/X

On Wednesday, Feb. 28, the ten United States spot Bitcoin ETFs saw a combined record-high net inflow of $673.4 million as Bitcoin touched an over two-year high of $64,000.

The latest GBTC outflows could put a dent in the day’s  inflows. Full inflow data across the other nine ETFs is not currently available, though Farside’s Feb. 29 data already shows Fidelity’s Bitcoin ETF — one of the top three largest funds by assets — as generating just $44.8 million net inflows, its fourth-lowest day of inflows.

Meanwhile, in a recent note to investors, JPMorgan analysts warn the price of Bitcoin may fall after the “halving euphoria” dissipates.

Bitcoin’s April-slated halving event — which many believe could push its price higher — could have the opposite effect and see it approach $42,000 instead, the analysts noted in a Feb. 29 note seen by Bloomberg.

Related: Bitcoin ETFs set for ‘even bigger wave’ in next few months: Bitwise

The Bitcoin halving event slashes the Bitcoin block reward from 6.25 BTC to 3.125 BTC and is a historic catalyst for Bitcoin price rallies as miner production costs typically rise afterward.

Production costs — the cost to mine one Bitcoin — are seen as the lowest Bitcoin’s price should theoretically go and should “mechanically double” to $53,000 post-halving, the analysts said.

However, mining difficulty could be 20% lower than first estimated — pushing down production costs and Bitcoin’s price, meaning the cryptocurrency could slide to $42,000 after the April halving, the analysts noted.

Analysts calculated the extra 20% mining difficulty drop by assuming some miners with less efficient machines and little money to upgrade will pull their rigs offline as running costs rise.

This would bring down Bitcoin’s hash rate — and its mining difficulty — by an estimated 20%, which aligns with estimates made by Galaxy Digital last month.

The analysts conceded the mining difficulty drop might not happen as inefficient mining rigs could remain profitable in the scenario that Bitcoin’s price remains elevated, especially due to demand from Bitcoin ETFs.

Big Questions: How can Bitcoin payments stage a comeback?