The Genesis liquidation should soon end the recent lull for Grayscale’s Bitcoin ETF.
Genesis wants to liquidate its bitcoins
Bankrupt company Genesis filed a court petition on Friday (February 2) to authorize the sale of more than $1.6 billion in bitcoin (BTC), ether (ETH) and ethereum classic (ETC).
Specifically, it’s $1.4 billion in bitcoin, $165 million in ethereum, and $38 million in ethereum classic.
These funds were invested at Grayscale on behalf of Exchange Gemini clients who had invested in its program “ Earn“…
The request asks that the Gemini exchange be able to monetize the 30 million shares in the GBTC ETF held as collateral on behalf of its users.
The hearing on this request will take place on February 8. Liquidation can then begin in order to reimburse Gemini customers:
If the New York courts authorize the liquidation, the outflows of the GBTC ETF will start again after they had finally faded for a few days. This will result in renewed downward pressure on BTC/USD.
Bearish pressure in sight on BTC/USD
Here is the summary of daily outflows since the ETF’s launch (in millions of dollars):
Grayscale has sold a total of 141,000 bitcoins (~$6 billion) since January 11. Partly because of the bankrupt exchange FTX which took advantage of the ETF craze to liquidate its bitcoins. A billion dollars in total, or around 24,000 bitcoins at current prices.
The rest comes from customers packing their bags because of management fees eight times higher than the competition.
These outflows from the GBTC ETF, however, are more than offset by ETFs from BlackRock, Fidelity, etc. More than 175,000 bitcoins in total. To see if this remains true next week in the event of liquidation of Genesis shares.
Genesis and Grayscale are key companies in the Digital Currency Group empire which also controls Foundry, the world’s largest mining pool. Genesis’ largest creditor is the Gemini exchange. More than 100,000 of its users are affected by its bankruptcy.
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