GBTC investors sell approximately $600M, causing Bitcoin to experience a 3% dip.

Bitcoin (BTC) experienced a decrease of over 3% from its highest point in 24 hours as investors in Grayscale’s Bitcoin exchange-traded fund (ETF) withdrew $598.9 million from the fund on February 29th, marking the second largest outflow in the fund’s history. Cointelegraph Markets Pro reported that Bitcoin reached a high of $63,585 on February 29th and has since dropped by approximately 3.3% to just under $61,500. Preliminary data from Farside Investor revealed that the Grayscale Bitcoin Trust (GBTC) saw daily net outflows of $600 million on February 29th, coming in second only to the record outflow of $640.5 million on January 22nd. Bloomberg senior ETF analyst Eric Balchunas commented on the significant outflows, stating, “That’s a lot.” This comes shortly after GBTC experienced a record low daily net outflow of $22.4 million on February 26th. On February 28th, the ten spot Bitcoin ETFs in the United States saw a combined record-high net inflow of $673.4 million as Bitcoin reached a two-year high of $64,000. The recent outflows from GBTC could impact the day’s inflows. While full inflow data for the other nine ETFs is not currently available, Farside’s data for February 29th shows that Fidelity’s Bitcoin ETF generated just $44.8 million in net inflows, marking its fourth lowest day of inflows. JPMorgan analysts warned investors in a recent note that the price of Bitcoin may decrease after the “halving euphoria” subsides. They noted that the halving event scheduled for April, which many believe will increase Bitcoin’s price, could have the opposite effect and cause it to drop to around $42,000. The halving event reduces the Bitcoin block reward from 6.25 BTC to 3.125 BTC and typically leads to price rallies as production costs for miners rise. The analysts stated that production costs, which represent the lowest price Bitcoin should theoretically reach, would double to $53,000 post-halving. However, they also noted that if mining difficulty is 20% lower than initially estimated, production costs and Bitcoin’s price could decrease, potentially resulting in a slide to $42,000 after the April halving. The analysts based this estimation on the assumption that some miners with less efficient machines and limited funds for upgrades would shut down their operations due to rising costs. This would decrease Bitcoin’s hash rate and mining difficulty by approximately 20%, aligning with previous estimates made by Galaxy Digital. The analysts acknowledged that the mining difficulty drop may not occur if inefficient mining rigs remain profitable, particularly due to demand from Bitcoin ETFs.