A new massive sale of bitcoins deposited in Grayscale’s GBTC ETF is looming following the outcome of the case involving the bankrupt company Genesis and the Gemini Exchange.
Victory for Genesis
Genesis won its case against Gemini regarding ownership of 31.2 million shares in the GBTC ETF. The New York court’s decision should allow creditors to recover part of their funds. However, we will have to wait for the resolution of certain motions to have the final word on the imbroglio.
As a reminder, Genesis filed for bankruptcy in January last year following the collapse of the investment fund Three Arrows Capital and from FTX two months earlier. As a result, the Gemini exchange – owned by the Winklevoss brothers – sued its former partner.
The dispute concerned the ownership of shares in the GBTC ETF given as security for loans granted to Genesis under the “Earn” investment program. More than 100,000 Gemini exchange customers are waiting to see their bitcoins again.
According to the Wall Street Journalmore than 31 million shares with a combined value of more than $1.3 billion could soon be sold as part of Genesis’ bankruptcy proceedings.
Genesis should also offload its shares in the Ethereum (ETHE) and Ethereum Classic (ETCG) trusts, both managed by the investment fund. Grayscale.
“Shares in the GBTC ETF can only be returned in dollars”senior analyst Vetle Lund told DL News. “But according to the motion, the goal is to use proceeds from sales of the GBTC ETF to purchase bitcoin.”
The reason being that customers of the “Earn” program want to get their bitcoins back, not dollars. Which means that “the net effect on bitcoin should be zero”believes Lund.
However, we do not know how quickly the rotation will take place. This could result in temporary bearish pressure on the BTC/USD pair.
Temporary drop in bitcoin?
Despite this Damocles sword, the price of bitcoin appreciated by more than 10% last week. This increase is directly linked to the two billion dollars that flowed into ETFs while outflows from GBTC decreased considerably.
We are at 10 consecutive days of net inflows. The recent volumes are staggering. BlackRock and Fidelity added the equivalent of $3 billion each to their Bitcoin ETFs in less than a month. Two historic records:
Fidelity even added its own Bitcoin ETF to its “All-In-One” fund this week. It allows its clients to allocate 1-3% of their portfolio to bitcoin.
If such an allocation becomes the norm, we’re talking about several trillion dollars that will eventually flow into bitcoin. Enough to propel it well beyond $100,000.
The halving planned for in two months should further speed things up. In mid-April, bitcoin will officially become twice as rare as gold.
But the path will be volatile. To see if Genesis sales will cause a temporary air gap. We saw this demonstrated last month with the liquidation of shares of the GBTC ETF held by FTX.
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