Sources reveal that FTX managed to sell around $1 billion in Grayscale’s Bitcoin ETF. Shedding light on a substantial portion of the outflow.
Investors swiftly divested over $2 billion from the Grayscale Bitcoin Trust (GBTC) post its recent conversion into an exchange-traded fund. Integral to this massive outflow was FTX’s bankruptcy estate, disposing of 22 million shares, an insight derived from CoinDesk’s private data review and insider information.
Despite the surge in new spot bitcoin ETFs following SEC approval on January 11. Grayscale, with nearly a decade-long history as a closed-end fund, faced substantial redemptions. The SEC’s nod to convert GBTC into an ETF, accompanied by the approval of 10 fresh bitcoin ETFs from major players like BlackRock. Fidelity.triggered an unforeseen shift.
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FTX, a key player in this narrative. Sold 22 million GBTC shares, wiping out its ownership and accounting for close to $1 billion. Bitcoin’s value plummeted post-ETF approval, contrary to the bullish expectations tied to the SEC’s decision, painting a stark contrast to the anticipated positive impact on BTC prices.
Now that FTX has completed its significant sell-off, the market might experience relief as bankruptcy estate liquidations of this scale are rare occurrences. FTX, like other major crypto traders. Seized the opportunity presented by the price gap between Grayscale trust shares and the net asset value of the underlying bitcoin.
FTX’s holdings of 22.3 million GBTC, valued at $597 million as of October 25, 2023. Surged to approximately $900 million on January 11. The first day of Grayscale’s bitcoin ETF trading on NYSE Arca. The brokerage account at ED&F Man Capital Markets (now Marex Capital Markets Inc.) held FTX’s shares in five Grayscale trusts. Along with nearly 3 million shares in a Bitwise-managed statutory trust.
Both Marex Capital Markets Inc. and Galaxy Digital, assisting in the asset sale by FTX’s bankruptcy estate, declined to comment on the unfolding developments. This seismic shift in the GBTC landscape sheds light on the intricate dynamics within the cryptocurrency market and its susceptibility to regulatory decisions.
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“This data underscores considerably stronger profitability in the mining sector compared to challenges experienced in 2022 and part of 2023.”
In approximately six months, Bitcoin undergo a “halving,” reducing the new bitcoins awarded to miners by half. Satoshi Nakamoto introduced this event in 2009 as an anti-inflationary measure. Occurring roughly every four years, the lead-up to halvings traditionally proves the most profitable time for crypto investors. “Buying bitcoin six months before a halving and selling 18 months after has historically outperformed a ‘buy and hold’ strategy,” affirms the analyst.
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