Bitcoin ETFs Poised for a Comeback as Exchange Balances Decline

Data indicates that Bitcoin ETFs, including the Grayscale Bitcoin Trust (GBTC), might experience a shift towards net inflows soon, as the balances of Bitcoin on exchanges show a downward trend. Despite a 20% drop in BTC/USD, coins continue to leave exchanges in January, challenging bearish predictions for Bitcoin prices.

According to recent data from on-chain analytics firm Glassnode, even with the dip in BTC/USD, there has been a consistent outflow of coins from exchanges. On-chain monitoring suggests that Bitcoin investor interest remains resilient in the face of current price pressures.

Glassnode reports that since the launch of the first U.S. spot Bitcoin exchange-traded funds (ETFs), daily outflows from the United States exchange Coinbase have exceeded 10,000 BTC. While balance data reflects corresponding inflows, a trend is emerging in the latter part of the month where outflows and inflows are becoming more balanced. This suggests a potential reduction in the volatility observed post-ETF launch on Jan. 11. Exchange BTC balances, which had been increasing throughout January, reversed direction on Jan. 23. Since then, the tracked trading platforms have lightened by 7,400 BTC ($321 million).

Simultaneously, ETF flows are favoring Bitcoin bulls. Previously, the Grayscale Bitcoin Trust (GBTC) was sending approximately $700 million in BTC to Coinbase per day, but the latest daily outflows have dropped to less than $200 million.

There's a potential shift for spot ETFs from net outflows to net inflows, as people become more comfortable with this asset class globally and a  positive trends appears.