Cryptocurrency exchange Coinbase believes the approval for crypto lending firm Genesis to sell its stake in Grayscale Bitcoin Trust (GBTC) will not disrupt the crypto market. Coinbase argues that most of the funds will flow back into the crypto ecosystem, resulting in a neutral impact on the market. Genesis was given approval by a bankruptcy judge to liquidate GBTC for $1.3 billion on Feb. 14. This news sparked concerns in the crypto market. Especially after Grayscale Investments was approved to convert GBTC into a spot Bitcoin exchange-traded fund (ETF), outflows exceeding $5 billion were experienced from GBTC.
Critical development for Bitcoin: Genesis sale is expected
Genesis was given approval by a bankruptcy judge on Feb. 14 to liquidate GBTC worth about $1.3 billion as part of its efforts to repay creditors. However, after Grayscale Investments was approved to convert GBTC into a spot Bitcoin exchange-traded fund (ETF) on January 10, there were outflows exceeding $5 billion from GBTC. There are concerns in the crypto industry that the recent approval for Genesis to also sell its GBTC shares could lead to additional downward pressure on the Bitcoin price.
Coinbase argued in its weekly report that while it is unclear where additional GBTC outflows will go—whether into other spot Bitcoin ETFs or directly into Bitcoin to repay creditors—it believes the funds will likely remain within the crypto ecosystem. “Our view is that the majority of these funds will remain within the crypto ecosystem and contribute to a neutral overall impact on the market,” the exchange said. Said.
Confirmation hearing on February 26
He explained that the rules of the bankruptcy plan allow Genesis to convert its GBTC shares into the underlying Bitcoin asset on behalf of creditors or sell the shares outright and distribute cash. However, his confirmation hearing is scheduled for February 26. Genesis owns 35.9 billion GBTC shares, along with 8.7 million Grayscale Ethereum Trust (ETHE) and 3 million Grayscale Ethereum Classic Trust (ETCG).
Meanwhile, it was also highlighted that net inflows into Bitcoin ETFs in the first 30 days exceeded net inflows in the first month of State Street’s SPDR Gold Shares ETF (GLD). Senior analyst Sam Callaghan of Swan Bitcoin shared that there will be some “netting” in the crypto market due to Genesis’ GBTC sales on X. However, Callaghan stated that there is uncertainty about the number of creditors who will sell Bitcoin assets. Jag Kooner, head of derivatives at MeanBitfinex, said in a statement that the significant “discount” provided to GBTC investors was the primary driver for the high-volume share sales in recent weeks.
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