Bitcoin Prepares for Potential Market Shakes as Genesis Cleared to Sell $1.6 Billion in GBTC Stock – TradingView News

ZyCrypto

Bitcoin has shocked its skeptics, rising in recent weeks to highs not seen since late 2021, amid good news from newly launched spot BTC exchange-traded funds (ETFs).

Bitcoin price rose to nearly $53,000 per coin on Thursday, regaining its $1 trillion asset value after 26 months. The asset is nearing its all-time high of around $69,044 with momentum building ahead of the April halving.

After a court allowed bankrupt crypto lender Genesis to liquidate its Grayscale Bitcoin Trust (GBTC) shares worth about $1.6 billion, there is speculation that the move will have a negative impact on the price of the leading cryptocurrency could impact.

Genesis sells $1.6 billion worth of GBTC shares

In a Zoom hearing on Feb. 14 in the U.S. District Court for the Southern District of New York, Judge Sean Lane allowed Genesis Global Holdco to liquidate a portion of its investments in Grayscale's trust products.

Genesis will now sell around $1.6 billion worth of GBTC shares – triggering further significant selling pressure on Bitcoin. Grayscale’s flagship GBTC fund converted into a spot Bitcoin ETF last month. The ETF has lost over $6 billion since it began trading.

Genesis, a subsidiary of Digital Currency Group, will also sell its shares in Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Classic Trust (ETCG) as part of the company's plan to compensate its creditors. The company wants to use the sale proceeds to repay customers and avoid monthly fees associated with its escrow agreements.

Is a BTC correction imminent?

In January, cornered digital asset exchange FTX sold over $1 billion worth of GBTC holdings. This move coincided with Bitcoin price crashing from a low of $49,000 to $39,000. Sam Callahan, a senior analyst at Swan, initially raised concerns on Billions for sale – Genesis.” This remark highlights the impending Genesis GBTC outflows that could have a profound impact on the Bitcoin market.

The crypto analyst with the online nickname Ozi predicted that the Genesis sales could push Bitcoin to levels of $47,000.

While Genesis sales could result in a significant decline, a little context is needed. First, Genesis users receive their repayments in Bitcoin and not cash. This eliminates the need to dump coins on the open BTC market. More importantly, most of the selling pressure following the sale of GBTC shares will likely be absorbed as Genesis buys Bitcoin from the market to repay investors.

The proposed settlement in Section 11 requires Genesis to repay creditors in kind (i.e. Bitcoin lenders will receive Bitcoin instead of USD in return).

Much of the selling pressure from the sale of GBTC is offset by the purchase of spot BTC through the Genesis estate.

February 13, 2024

In simpler terms, Bitcoin is only sold by individual creditors, and even in this case the sell-off would extend over several weeks. This somewhat alleviates market fears surrounding Genesis’ GBTC sale.

At the time of writing, BTC was trading for $51,849.14, up 0.1% from the same time yesterday.

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