Analyst James Seyffart attributes last week's Bitcoin ETF outflows to bankruptcy proceedings, particularly involving Gemini and Genesis.

According to data from CoinShares, digital asset investment products experienced unprecedented weekly outflows, totaling $942 million. This marks the first outflow after seven consecutive weeks of inflows, which amounted to $12.3 billion. Notably, Grayscale Bitcoin ETF GBTC witnessed outflows of $2 billion.

GBTC Plays a Disruptive Role Recent data reveals that new ETF issuers in the US experienced inflows totaling $1.1 billion, partially offsetting the substantial outflows of $2 billion observed from the incumbent Grayscale Bitcoin ETF GBTC during the same period.

Bloomberg's cryptocurrency strategist James Seyffart suggests that the net outflows from Bitcoin ETFs last week were primarily due to bankruptcy proceedings, with selling activities predominantly associated with Gemini and Genesis.

Seyffart anticipates a slowdown in outflows over the next week as the selling pressure related to bankruptcy-related activities is expected to ease. The group is estimated to hold approximately $3.9 billion worth of Grayscale Bitcoin Trust (GBTC) to offload.

One of the significant deterrents with Grayscale has been its high gas fee, leading to significant outflows. However, addressing this issue, Grayscale CEO Michael Sonnenshein stated that they would work on reducing the fees soon.

Bloomberg ETF strategist Eric Balchunas suggests that there may never be significant inflows into GBTC, although he speculates that smaller versions of Bitcoin-based ETFs could see inflows if the fees were reduced to less than 30 basis points.

Balchunas points out that a considerable portion of GBTC's assets under management (AUM) may consist of "mirage assets" or "tax hostages," implying that there may not be many actual individuals left who can freely exit their positions.

Bitcoin dominated the outflows, accounting for 96% of the total, with $904 million leaving the asset. Additionally, short-Bitcoin experienced minor outflows totaling $3.7 million. Ethereum, Solana, and Cardano also faced outflows of $34 million, $5.6 million, and $3.7 million, respectively.

However, the rest of the altcoin space saw a positive trend, with net inflows totaling $16 million. Particularly notable were Polkadot with $5 million, Avalanche with $2.9 million, and Litecoin with $2 million in inflows.