The sale of Genesis GBTC will be balanced in the crypto market – Coinbase
Cryptocurrency exchange Coinbase believes that bankrupt crypto lender Genesis' approval to sell its stake in Grayscale Bitcoin Trust (GBTC) will not disrupt the crypto market. It has been argued that most of the funds will go back into the crypto ecosystem and have a neutralizing effect on the market.
Genesis was granted permission by bankruptcy judge on February 14 to release GBTC worth about $1.3 billion in an effort to repay creditors.
However, on January 10, GBTC experienced over $5 billion in inflows following the approval of Grayscale Investments to convert GBTC into a Bitcoin Exchange Traded Fund (ETF). There are concerns in the crypto industry that the recent approval for Genesis to sell GBTC shares could put further downward pressure on the price of Bitcoin (BTC).
Coinbase argued in its weekly report where additional GBTC will flow – to other Bitcoin ETFs or directly to pay off Bitcoin lenders – although it is not certain, but believes that the money will remain in the crypto ecosystem.
“Our view is that most of these funds can remain in the crypto ecosystem, which will contribute to the overall impact in the market.”
Bankruptcy plan rules allow Genesis to convert GBTC shares into underlying bitcoin assets on behalf of creditors or distribute the proceeds by selling the shares outright, he explained.
However, the confirmation hearing has been set for February 26.
Related: Bankrupt Crypto Lender Genesis Seeks Approval to Sell $1.6B in Trust Assets
Genesis holds 35.9 billion GBTC shares, with 8.7 million in Grayscale Ethereum Trust (ETHE) and 3 million in Grayscale Ethereum Classic Trust (ETCG).
Meanwhile, net income for Bitcoin ETFs in the first 30 days has outpaced that of the State Street SPDR Gold Shares ETF (GLD) in the first month.
Senior analyst Sam Callaghan from Swan Bitcoin on X (formerly Twitter) says there will be some “netting” in the crypto market due to the sale of Genesis GBTC.
However, Callaghan said there is uncertainty about the number of lenders selling their Bitcoin holdings.
I received some important context in the responses to this post…
Genesis Lenders will be paid in BTC due to negotiations around the type and distribution of cash.
So there will be some net money here as these GBTC shares are sold and the Genesis estate buys Bitcoin…
— Sam Callahan (@samcallah) February 13, 2024
MeanBitfinex's Head of Results Jag Kooner told Cointelegraph that the significant “discount” for GBTC investors was the main driver for the large volume sell-off in recent weeks.
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