Bitcoin (BTC) shows no sign of recovery as of yet, as the original crypto continues to hover slightly above the $16k level. Moreover, the FTX contagion seems to be hitting major institutions as days roll by.
Genesis Trading, a company owned by the Digital Currency Group (DCG) conglomerate, stopped paying out at its crypto lending division last week. This sparked several rumors regarding Genesis’ solvency as well as DCG’s future. The narrative has also focused on the largest institutional Bitcoin investment vehicle, the Grayscale Bitcoin Trust (GBTC), despite assurances from management.
Long-term owners of GBTC will undoubtedly suffer a catastrophe if Digital Coin Group fails, as the fund’s discount may reach a record-breaking 70%.
Will DCG liquidate its Grayscale Bitcoin Trust positions?
The potential liquidation of DCG’s GBTC holding was discussed at a recent board meeting. Digital Coin Group might pay off some of its debts by selling the sizable investment in Grayscale’s trust at a sizable loss.
To fill a $1 billion shortfall on its balance sheets brought on by Genesis’ bankruptcy, DCG initiated an urgent fundraising campaign. Every available fund on the market rejected such a dubious offer, as was to be expected. However, DCG said it had no alternative but to sell off whatever assets it could.
If significant GBTC (Grayscale Bitcoin Trust) investors start selling off their holdings, a big 70% discount to NAV may become a reality. However, this offers a fantastic opportunity for someone new to the cryptocurrency sector. The situation will, nonetheless, be disastrous for long-term shareholders.
Coinbase Custody recently revealed how much was held in each Grayscale product. As per the data, Grayscale Bitcoin Trust had 635,235 BTC, worth a whopping $10,200,744,223. However, no cold addresses were shared.
At press time, Bitcoin (BTC) was trading at $16,081.71, down by 2.9% in the last 24 hours.