Coinbase expects a neutral impact on the crypto market

Cryptocurrency exchange Coinbase believes the fact that bankrupt crypto lending company Genesis has received approval to sell its Grayscale Bitcoin Trust (GBTC) shares will not disrupt the crypto market. A lot of money will go back into the crypto ecosystem, which will have a neutral effect on the market.

Genesis received approval from a bankruptcy judge on February 14 Withdrawal of GBTC worth about 1.3 billion dollars. This is intended to compensate creditors.

After Grayscale Investments received approval on January 10, GBTC in exchange trading Bitcoin spot ETF However, GBTC recorded an outflow of more than $5 billion. Concerns have arisen in the crypto industry that the recent approval of Genesis to also sell shares of GBTC could lead to further downward pressure on the price of Bitcoin (BTC).

Coinbase argued in its weekly newsletter A message, although it is unclear whether the additional flow of GBTC will go into other Bitcoin ETFs or directly into Bitcoin to compensate creditors. But it also means that money will flow into the crypto ecosystem.

“In our opinion, a lot of money can remain in the crypto ecosystem and have an overall impact on the market.”

The company explained that under the bankruptcy plan, Genesis will be allowed to either convert GBTC shares into underlying Bitcoin assets on behalf of creditors or sell the shares directly and distribute the funds.

A confirmation hearing is scheduled for February 26.

Genesis has 35.9 billion shares of GBTC, along with 8.7 million shares of Grayscale Ethereum Trust (ETHE) and 3 million shares of Grayscale Ethereum Classic Trust (ETCG).

It further highlighted that Bitcoin ETFs net returns in the first 30 days exceeded State Street’s SPDR Gold Shares ETF returns in its first month.

Sam Callaghan, senior analyst at Swan Bitcoin, said in an X post that there will be a “reduction” in the crypto market due to Genesis’ GBTC sale.

However, Callaghan said it is impossible to say with certainty how many creditors will sell their Bitcoin holdings.

I have learned valuable information in the responses to this post…

Due to the negotiation of type versus cash distribution, Genesis creditors will be paid in BTC.

So there will be income here as these GBTC shares are sold and the Genesis estate buys Bitcoin up to…

— Sam Callahan (@samcallah) February 13, 2024

Bitfinex Head of Assets Jag Kooner explained that the big discount for GBTC investors The main reason for the increase in volume of stock sales in the past few weeks.