Bitcoin turns positive for the week as investor worries about GBTC sell pressure subside

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Bitcoin climbed higher to end the week as investors took some comfort in the idea that outflows from the Grayscale Bitcoin ETF (GBTC) could be starting to taper off.

The price of the cryptocurrency climbed nearly 6% to $42,131.57 according to Coin Metrics, pushing its weekly gains into the green. Ether was up 2%, trading at $2,264.73. It’s on pace to post a 9% decline for the week.

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Bitcoin pulls out of the red for the week

Thursday “registered one of the lowest days in net outflows from GBTC and the third consecutive day of declining outflows, which could indicate the beginning of a slowdown in redemptions,” Needham’s John Todaro said in a note.

“While it has been difficult to quantify how much more should come out of GBTC, we believe two of the largest drivers of selling [– outflows driven by the FTX estate and arbitrage funds –] are nearly done,” he added. 

On Thursday JPMorgan strategist Nikolaos Panigirtzoglou made a similar observation, saying “GBTC profit taking has largely happened already … this would imply that most of the downward pressure on bitcoin from that channel should be largely behind us.”

Additionally, investors may be unwinding some of the rotation from bitcoin to ether that took place after the bitcoin ETFs were approved, after the Securities and Exchange Commission this week delayed its decision on two proposed spot ether ETFs — one from BlackRock and another from Grayscale.

Bitcoin dropped sharply at the beginning of the week, falling under $39,000 for the first time since early December in a widely expected correction following the approval and launch of spot bitcoin ETFs in the U.S.

The carnage earlier this week wasn’t as bad as some chart analysts had projected. Although charts indicate bitcoin’s long-term uptrend still holds, some analysts expected the cryptocurrency to fall to as low as $36,000.

Bitcoin mining stocks have outperformed the cryptocurrency. Riot Platforms rose nearly 7% Friday. It’s set to gain 10% this week, which would mark its first positive week in five. Marathon Digital is higher by 10% and on track for an 11% weekly gain.

—CNBC’s Gina Francolla contributed reporting

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