The price of bitcoin rebounded above $41,000 this morning, with outflows for Grayscale’s GBTC converted spot ETF slowing for the third consecutive day.

Data from BitMEX Research shows GBTC witnessed outflows of $394.1 million on Jan. 25, down from $429.3 million on Wednesday and $515.3 million on Tuesday. While the GBTC outflows remain very high, yesterday’s figure is the second-lowest since the first trading day for the spot bitcoin ETFs on Jan. 11.

The nine newborn spot bitcoin ETFs — BlackRock (IBIT), Fidelity (FBTC), Bitwise (BITB), Ark 21Shares (ARKB), Invesco (BTCO), VanEck (HODL), Valkyrie (BRRR), Franklin Templeton (EZBC) and WisdomTree (BTCW) — are yet to witness any daily outflows.

IBIT registered the largest inflows yesterday with $170.7 million. FBTC generated $101 million worth of inflows and BITB was in third with $20 million. However, total inflows from the nine of $314.30 on Thursday were not enough to overcome GBTC outflows, creating a net outflow of nearly $80 million.

Overall, the spot bitcoin ETFs have witnessed net inflows of $744.6 million since launch — with the newborn nine totaling $5.53 billion of inflows and GBTC registering total outflows of $4.79 billion.

Bitcoin BTC +0.93% is currently trading up 3% over the past 24 hours at $41,328, according to The Block’s price page. However, the largest cryptocurrency by market cap had previously fallen over 20% from a high of around $49,000 on the day the spot bitcoin ETFs launched to $38,600 on Jan. 23.

BTC/USD price chart. Image: The Block/TradingView.

Liquidations spike after bitcoin uptick

Bitcoin’s rise above the $41,000 mark, caused over $110 million in liquidations on centralized exchanges in the past 24 hours.

The majority of crypto liquidations involved short positions, leading to a loss of over $66 million, while long positions contributed around $44 million to the total liquidations, according to Coinglass data.

In derivatives markets, liquidations take place when a trader's position is forcibly closed due to insufficient funds to cover losses. This situation arises when market movements are unfavorable to the trader's position, resulting in the depletion of their initial margin or collateral.

The volatility that shook out many leveraged positions was elevated compared to the beginning of the month. The Block's data dashboard puts current annualized bitcoin volatility at 53.95%, an increase from a low of around 42% at the beginning of January.

More downside to come?

JPMorgan analysts, led by Nikolaos Panigirtzoglou, wrote in a note on Thursday that they expect limited further downside for bitcoin as profit-taking in GBTC has largely concluded. The cashing in of profits by GBTC investors was behind the recent decline in bitcoin's price, according to the analysts, but the worst appears to be over now. However, they cautioned that if GBTC's 1.5% fee isn't reduced soon, the fund could experience ongoing outflows and lose market share to rivals with cheaper fees.

GBTC investors — who over the past year had been buying the fund's shares at a significant discount to net asset value to position for a potential ETF conversion — were "taking full profit post-ETF conversion by exiting the bitcoin space entirely rather than shifting to cheaper spot bitcoin ETFs," the JPMorgan analysts previously noted last week.

Chris Burniske, Partner at Placeholder VC who previously led crypto at Ark Invest, is not so sure, speculating that bitcoin will fall to “at least” $30,000 to $36,000 before a local bottom. “[I] wouldn't be surprised if we test the mid-to-high 20s before all is said and done, and we can make an actual move towards previous ATHs,” Burniske posted on X.

Burniske said he continues to believe the long-term trend remains robust but warned about volatility. “Don't ignore we also just saw many of our first parabolas of the cycle, and they're now breaking... and macro looks precarious on a number of levels,” he added. “New product innovations are close, but not quite there yet... things still feel insular.”