The contagion of the FTX collapse is also spreading to crypto-focused companies and platforms. This week, all eyes will be on the credit platform Genesis, which is reportedly on the verge of bankruptcy. The firm is currently desperately trying to raise $1 billion to get out of its liquidity crunch. The collapse of Genesis, a subsidiary company like Grayscale, will directly affect the market.
Altcoin Sherpa expects 50% drop in case of Grayscale and Genesis bankruptcy
The Twitter analyst says that Genesis, a subsidiary of the Digital Currency Group, will directly affect Ethereum in the event of a possible bankruptcy. In such a case, Sherpa predicts that Ethereum will shrink to $ 500. According to the analyst, if Genesis had to sell its GBTCs to solve its liquidity crisis, we could see more than 50% drop in volume giants like Ethereum.
Sherpa specifically took a look at Bitcoin, Ethereum and Solana in his tweets dated November 21 and 22. He said it provides long-term opportunities for Bitcoin. The crypto analyst believes that BTC has more room for decline. However, he says that he will buy at the levels of 16,000, 14,000 and 12,000 dollars.
We could see much worse than Sherpa expected
Currently, Genesis, a subsidiary of the Digital Currency Group like Grayscale, is seeking $1 billion in bailout funds. According to reports, the firm is desperately trying to raise funds to facilitate withdrawals on its platform. A report from news site WSJ suggested that Genesis is in talks with Binance and Apollo to bid for the credit book. However, Binance rejected the offer, stating that the investment could lead to a conflict of interest in the future.
DCG, the parent company of Genesis, is currently facing a huge time crunch. Reports also suggest that if it fails to raise the funds, it will sell large quantities of Bitcoin from Grayscale. Grayscale’s Bitcoin Trust product GBTC is one of the largest Bitcoin whales in history. Rumors say that DCG also bought a lot of bad debt, which it used to buy GBTC. If true, Genesis will make the current state of the market much worse.
By the way, it is known that the largest GBTC whale on the market is Digital Currency Group. Therefore, GBTC’s massive discount to the spot BTC price provides DCG with a huge arbitrage opportunity.
Can Genesis raise money? Or will it go bankrupt?
The Block editor Frank Chaparro reported through his sources that Genesis has cut its fundraising goal in half. He wrote in a long thread on Twitter today:
The Block crypto trading firm Genesis, which is struggling to raise emergency capital to support the lending unit’s liquidity profile, cut its growth target from $1 billion to $500 million, sources said. As Bloomberg reports, it faces potential bankruptcy without funding.
Chaparro also adds in his Genesis response to this:
We have no plans to file for bankruptcy anytime soon. Our aim is to resolve the current situation with reconciliation without the need for any bankruptcy filing. Genesis continues to engage in constructive talks with creditors.
cryptocoin.com As we have reported, the company currently holds a large amount of FTX Tokens (FTT).
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