Cryptocurrency exchange Coinbase has stated that the approval for bankrupt crypto lending firm Genesis to sell its shares of Grayscale Bitcoin Trust (GBTC) will not have a negative impact on the crypto market. Genesis was given permission by a bankruptcy judge to liquidate about $1.3 billion worth of GBTC as part of its efforts to pay back creditors. GBTC has experienced outflows of over $5 billion since receiving approval to convert into a spot Bitcoin exchange-traded fund (ETF). There are concerns that Genesis’ approval for further sell-offs could cause the price of Bitcoin to decrease even more. Coinbase believes that most of the funds from Genesis’ sell-off will stay within the crypto ecosystem, resulting in a neutral effect on the market.
Coinbase explained in its weekly report that the bankruptcy plan allows Genesis to either convert GBTC shares into Bitcoin for the creditors or sell the shares outright and distribute the cash. The confirmation hearing for this matter is scheduled for February 26. Genesis currently holds 35.9 billion shares of GBTC, as well as shares of Grayscale Ethereum Trust (ETHE) and Grayscale Ethereum Classic Trust (ETCG).
Coinbase also highlighted that Bitcoin ETFs have seen higher net inflows in their first 30 days compared to State Street’s SPDR Gold Shares ETF (GLD) in its first month. There is some uncertainty about the number of creditors who will sell their Bitcoin holdings as a result of Genesis’ GBTC sales. Some experts have mentioned “netting” in the crypto market due to these sales, while others have pointed to the significant discount offered to GBTC investors as the main reason for the high volume of share selling in recent weeks.
Coinbase does not expect Genesis’ approval to sell its GBTC shares to have a major impact on the crypto market. It believes that most of the funds will likely stay within the crypto ecosystem, contributing to a neutral overall effect. The confirmation hearing for the sell-off is set for later this month, and the industry will continue to monitor the situation closely.
The confirmation hearing later this month is definitely an event to watch closely. Let’s see what impact it will have on the market!
It’s hard to trust the stability of the crypto market with these constant sell-offs.