The sale of GBTC and Genesis will decrease in the crypto market – Coinbase

The sale of GBTC and Genesis will decrease in the crypto market – Coinbase

Crypto exchange Coinbase believes the approval of bankrupt crypto lender Genesis for the sale of shares of Grayscale Bitcoin Trust (GBTC) will not disrupt the cryptocurrency market. Coinbase claims that most of the money will go back into the crypto ecosystem, with a neutral impact on the market.

Genesis received approval from a bankruptcy judge on February 14 to liquidate approximately $1.3 billion in GBTC as part of its efforts to pay creditors.

However, following the approval of Grayscale Investments on January 10 to convert GBTC into a Bitcoin exchange-traded fund (ETF), the fund received more than $5 billion in revenue. In the crypto sector there are fears that the recent approval of the sale of shares of GBTC and Genesis could lead to further downward pressure on the price of Bitcoin (BTC)

To him report weekly, Coinbase said that while it is unclear whether additional payments from GBTC will go into other Bitcoin ETFs or directly into Bitcoin to pay creditors, it believes that the money will likely remain within the crypto ecosystem.

“Our view is that the majority of these funds will remain within the crypto ecosystem, contributing to the overall impact of the market.”

He explained that the provisions of the bankruptcy plan allow Genesis to convert GBTC shares into underlying Bitcoin assets on behalf of creditors or sell shares and distribute cash.

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).

At the same time, he pointed out that net returns in Bitcoin ETFs in the first 30 days exceeded those of State Street’s SPDR Gold Shares ETF in its first month.

Inflation-adjusted net flows and total assets of various ETFs. Source: Coinbase

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

However, Callaghan said there is uncertainty about how many creditors will sell their Bitcoin holdings.

We’re sharing a tweet about X by – Sam Callahan (@samcallah) February 13, 2024

In the responses to this post I received key pieces of context…

Because of the negotiation of product distribution vs. in cash, Genesis creditors will be paid in BTC.

So there will be compensation when GBTC stock is sold and Genesis ownership buys Bitcoin for…

Meanwhile, Jag Kooner, head of derivatives at Bitfinex, told Cointelegraph that the huge discount given to GBTC investors is one of the main reasons behind the large volume of stock sales in recent weeks.