The price of Bitcoin rose sharply this week, touching heights not seen since the 2021 bull run. But will it last?
have news dropped that a US bankruptcy judge has granted bankrupt crypto lender Genesis permission to sell $1.6 billion in Grayscale Bitcoin Trust (GBTC) shares. The idea is to repay creditors who have been waiting for their money since the lender went bankrupt.
Just last month the push came from Grayscale whipping out huge amounts of crypto to its custodian, Coinbase, led to a crash in the price of BTC.
So it's only natural to wonder whether the same thing would happen again when the Genesis finally sells.
“Due to the Genesis bankruptcy and the situation with Gemini, GBTC is expected to see at least $1.4 billion in sales, possibly even more,” James Seyffart, business intelligence analyst at Bloomberg, confirmed to Decrypt. “But we also don’t know how much has already been sold.”
First, some background: Genesis is a subsidiary of Digital Currency Group (DCG), which previously allowed people to earn interest on their cryptocurrencies.
It filed filed for bankruptcy a year ago and disclosed his risk collapsed Crypto venture fund Three Arrows Capital. According to the crypto megabrand FTX went bankrupt finally Genesis in 2022 froze Customer withdrawals.
The creditors are still waiting for the money they had put into the product and DCG has announced that the creditors will be compensated. The plan approved by a judge this week will allow creditors to be repaid.
However, experts do not expect the price of Bitcoin to be affected that much.
“Personally, I don’t expect to buy [iBitcoin Trust shares] I will continue like this for the rest of the year, but at the same time, if you had asked me a few weeks ago, I would not have expected the flows to be as strong as they have been,” Seyffart said. “It’s anyone’s guess, but the entire group of Bitcoin ETFs – namely the newborn nine – had a hugely successful first month.”
Bloomberg ETF expert Eric Balchunas told Decrypt that while the Genesis sale could have a negative impact, the ETFs have “shown real strength,” which could prevent a major BTC selloff.
After a decade of rejecting spot Bitcoin ETFs, the Securities and Exchange Commission announced in January approved 10 products. They started trading on January 11th and were a great successand accumulates billions in assets under management.
“The level of liquidity and resilience we have seen in Bitcoin in recent weeks is evidence of the high demand in the market,” said Miguel Morel, CEO of blockchain data company Arkham Intelligence.
He added that he “didn’t expect.” [the Genesis news] going too far beyond what we’ve already seen.”
Finally, Julio Moreno – head of research at on-chain and market data analytics firm CryptoQuant – agreed that “higher Bitcoin demand from Bitcoin ETFs” is more than enough to mitigate any downward pressure.
“On the margin, it can be bearish on the price – in fact, on the day FTX sold $1 billion worth of GBTC shares, we saw a 5% price decline,” Moreno told Decrypt. “However, the impact may be limited [that] The market is already anticipating this sale.”
CryptoQuant data also shows reHe added that unrealized profits for short-term Bitcoin holders were relatively low, which could also indicate low selling pressure.
Edited by Ryan Ozawa.
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