Coinbase predicts that the proceeds from Genesis’ GBTC sell-off will “stay inside the crypto ecosystem,” despite concerns that it would affect the price of Bitcoin.
Trading digital currency Coinbase maintains its position that the cryptocurrency market would remain unaffected by the approval of the sale of shares in Grayscale Bitcoin Trust (GBTC) by the insolvent crypto lending business Genesis. There will be little effect on the market, it said, since most of the money will go back into the cryptocurrency ecosystem.
On February 14th, a bankruptcy court authorized Genesis to sell around $1.3 billion worth of GBTC to pay back its creditors.
But more than $5 billion has been pulled out of GBTC since Grayscale Investments was approved to turn it into a spot Bitcoin ETF on January 10th. The new green light for Genesis to sell out GBTC shares has some in the crypto sector worried that Bitcoin’s price would fall much further.
According to Coinbase’s weekly report, the company is of the belief that the extra GBTC will stay inside the crypto ecosystem, even if it is unknown where exactly the money will go. This might go towards other spot Bitcoin ETFs or even into Bitcoin itself to repay debtors.
“We believe that a significant portion of these money will probably stay within the cryptocurrency ecosystem, which will have little impact on the market as a whole.”
According to the bankruptcy plan’s regulations, Genesis has two options: either sell the GBTC shares and divide the proceeds or convert them into the underlying Bitcoin asset on behalf of the creditors.
But there will be a confirmation hearing on February 26. Among Genesis’ holdings are 35.9 billion GBTC, 8.7 million ETHE, and 3 million ETCG, or Grayscale Ethereum Classic Trust.
Additionally, it brought attention to the fact that Bitcoin ETFs saw more net inflows in their first 30 days than State Street’s SPDR Gold Shares ETF (GLD) had in its first month.
According to Swan Bitcoin’s senior analyst, Sam Callaghan, who spoke on X (previously Twitter), the crypto market will see some “netting” as a result of Genesis’ GBTC sales.
Callaghan did say that the exact amount of debtors planning to liquidate their Bitcoin holdings is unknown.
According to MeanBitfinex’s director of derivatives, Jag Kooner, who spoke with Cointelegraph, the large “discount” given to GBTC investors was a key factor in the recent flurry of share sales.
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