GBTC Liquidation by Grayscale: Unveiling the Hidden Layers

Crypto News- In the ever-evolving landscape of cryptocurrency, Grayscale’s GBTC (Grayscale Bitcoin Trust) has become a focal point of attention. Recent developments signal a significant shift in the market dynamics, with implications reaching far beyond mere asset liquidation.

On February 13, Sam Callahan, a seasoned analyst at Swan, shed light on a looming event: the impending sale of billions of dollars’ worth of GBTC by another bankruptcy estate. This revelation adds another layer to the ongoing saga.

GBTC Liquidation by Grayscale: Unveiling the Hidden Layers

FTX, following its conversion into an ETF in January, has already offloaded close to $1 billion in GBTC shares, effectively reducing its stake in Grayscale to zero. But the plot thickens with Genesis, a bankrupt crypto lender, seeking court approval to sell approximately 36 million shares of GBTC, valued at around $1.5 billion.

Of particular intrigue is the origin of these shares. A portion, 4.7 million shares, traces back to the defunct crypto hedge fund Three Arrows Capital, adding a twist of irony to the narrative. The remaining 31 million shares were utilized as collateral for the ill-fated Gemini Earn program, a detail unearthed from court documents by Callahan.

The ramifications extend further, as an additional 31 million GBTC shares, valued at $1.3 billion, could soon flood the market. These shares, earmarked for Gemini lenders, were subject to a dispute over ownership between Genesis and Gemini’s parent company, DCG. The resolution favors Genesis, paving the way for a potential sell-off to appease creditors.

Grayscale GBTC Exodus: The Unfolding Crypto Drama

In total, Genesis could unleash as many as 67 million shares of GBTC, totaling nearly $3 billion. However, creditors will be compensated in BTC, alleviating some of the direct selling pressure. Nonetheless, this impending event is poised to reverberate across the crypto sphere.

Meanwhile, amidst the GBTC exodus, Grayscale’s Bitcoin liquidation witnessed a brief slowdown before resuming its momentum. Farside reports outflows of $95 million on February 12 and $72.8 million on February 13, totaling $6.5 billion since the ETF conversion.

Yet, amidst the turbulence, giants like BlackRock and Fidelity continue to inject substantial sums into the market. Despite the GBTC outflows, February 13 witnessed a staggering net inflow of $631 million, underscoring the resilience of the broader crypto investment landscape.

As the saga unfolds, the crypto community braces for the ripple effects of Grayscale’s GBTC exodus, with each development reshaping the industry’s narrative.