Grayscale Lit Bitcoin’s Candlestick, Will the Flame Burn After the FTX Fiasco?

Estimated read time 3 min read
  • Grayscale’s Bitcoin purchase rallied the price to nearly 70,000 in November 2021, will Grayscale’s impact by the FTX blowout cause Bitcoin sink to its lowest levels?
  • GBTC is the largest Bitcoin fund in the world that gives investors a way to get passive exposure to Bitcoin.

Bitcoin enthusiast, Peter Schiff an American crypto stock broker, tweeted that the world’s largest cryptocurrency fund is the reason why Bitcoin hit its all-time high of $69000 in November 2021 and will be the reason for Bitcoins fall.

Grayscale was consistently advertised on CNBC, this is according to the Bitcoin critic Peter, the goal was to get attention from retail investors. Well afterward, Grayscale attracted investors and hence proceeded to buy Bitcoin (BTC). Peter Schiff says that this move led Bitcoin’s price to rally close to $70,000  in the year 2021.

The theory may be correct or incorrect considering when Grayscale made the BTC purchase and the price taken to the moon. Grayscale issuing more shares only allowed it to raise more capital than it had. Is it just coincidental that the Bitcoins price escalated at the same time that Grayscale did the purchase? This might be the theory that many investors hold.

When the Grayscale Bitcoin Trust first went live almost 8 years ago, only accredited investors could purchase the shares. Grayscale bitcoin fund, which has $10.7 billion worth of bitcoin under management, has slumped about 75% in the past 12 months.

GBTC is a security that gives investors a way to get passive exposure to Bitcoin without buying the asset As of April 2022, the GBTC holds 654,885 Bitcoin. This represents roughly 46% of the 1.4 million Bitcoin that is currently held by publicly traded companies. That also makes the GBTC the largest Bitcoin fund in the world.

Could Grayscale Bring Doom to Bitcoin?

Grayscale and Genesis are both subsidiaries of the Digital Currency Group. It is the largest cryptocurrency fund, unfortunately, the firm was embroiled in the turmoil swirling around the troubled sector of FTX, a further sign of warning towards digital assets.

The share price of the $10.5bn Grayscale Bitcoin Trust (GBTC), which owns 3.5% of the world’s bitcoin, has plummeted to a 39 percent discount to the value of its underlying assets as investors have embarked on an increasingly desperate scramble to exit.

The blowout means investors in the trust have suffered 83% loss since Bitcoin had its ATH in November 2021, outstripping the 74% slide in the value of bitcoin itself.

Anxiety struck closer to home for Grayscale on Wednesday when crypto broker Genesis, which originated more than $50bn of loans last year, suspended redemptions and originations of loans at its lending arm after suffering financial contagion from the failure of Three Arrows Capital, the Singapore crypto hedge fund that filed for bankruptcy in July.

Related: GRAYSCALE FIGHTS SEC AFTER $12B BITCOIN ETF BID REJECTION

Grayscale CEO Michael Sonnenshein recently claimed that the launch of the first short Bitcoin exchange-traded fund (ETF) in the U.S. could be a positive sign for the cryptocurrency industry. Is this also a positive sign for Bitcoin?

Grayscale made a great impact on Bitcoin’s price after purchasing the huge lump, Will Grayscale drop Bitcoin to the red scale if it suffers a greater impact from the FTX blowout?

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