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(Bloomberg) — Bitcoin approached $42,000 amid a slowdown in outflows from the $20 billion Grayscale Bitcoin Trust that strategists said may help to stanch a two-week slump in the token.

About $4.8 billion has exited the more than decade-old Bitcoin portfolio — the world’s largest — since it became an exchange-traded fund on Jan. 11, data compiled by Bloomberg show. Bitcoin had shed around 20% in the same period.

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The fund’s conversion from a closed-end format allowed investors to close out a popular arbitrage trade and sparked disposals by the estate of the bankrupt FTX exchange. The daily pace of outflows from the vehicle, also known as GBTC, hit a peak of $641 million on Jan. 22 but cooled to $394 million by Jan. 25.

“We’re starting to see a pattern of decreasing redemptions from GBTC,” Sean Farrell, head crypto strategist at Fundstrat Global Advisors, wrote in a note. “We’ll certainly need to see a few more days of follow-through, but a mere slowing down of this AUM exodus would serve as a large boost for the market.”

The Grayscale fund began trading in its new format on the same day that nine other spot Bitcoin ETFs, including from BlackRock Inc. and Fidelity Investments, debuted in the US. Those funds have attracted more than $5 billion, while the net inflow into the 10 spot ETFs as a whole stands at about $745 million, according to data compiled by Bloomberg.

Declining interest in the much-anticipated investment vehicle is a “natural pattern,” said Ben Johnson, head of client solutions at Morningstar Inc.

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“Now that the dust has settled a bit, I’m not surprised that volumes and flows have settled,” Johnson said. “This is similar to the pattern we saw with BITO when it first launched as well as the experience of spot Bitcoin products launched in other markets like Canada.”

Read more: Why the Bitcoin ETF Was Such a Long Time Coming: QuickTake

Shares in the Grayscale vehicle fell to a discount to the portfolio’s underlying Bitcoin holdings from early 2021 when the product was closed-end. ETF units tend to hug net asset value so the prospect of the trust’s conversion led speculators to bet on the discount disappearing, which has duly happened.

“Profit-taking on previous GBTC investments, made at a discount to net asset value last year, has likely been a major driver behind Bitcoin’s correction,” JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou wrote in a note. Such profit-taking “should be largely behind us, limiting any downside for Bitcoin from here,” the team added.

‘Dominating’ Volumes

The Grayscale Bitcoin Trust “has been dominating trading volume, and has already solidified its role as a true capital markets tool for risk transfer in Bitcoin,” John Hoffman, managing director of sales and distribution at Grayscale Investments, said earlier this week. He added that “GBTC’s diverse shareholder base will continue to deploy strategies that impact inflows and outflows.”

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Bitcoin surged almost 160% last year, outperforming traditional assets such as stocks, amid expectations that the US spot ETFs would catalyze wider adoption of the cryptocurrency by institutional and individual investors. 

The token has been retreating since the turn of the year and trailing global markets as investors wait to see if the hype becomes reality. The group of US spot Bitcoin ETFs had the most successful ETF launch in history, going by both trading and flow metrics, according to Bloomberg Intelligence.  

Bitcoin hit an intraday peak of $49,021 on Jan. 11 when the funds rolled out before sliding to a low of $38,510 earlier this week. The largest digital asset rose 5.1% to $41,940 as of 12:03 p.m. in New York on Friday. It set a record high of nearly $69,000 during the pandemic-era crypto mania in 2021.

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