Although the CEO warned that anything could happen, he believes that the total 40,000 GBTC to be unlocked soon would not really affect Bitcoin.
The CEO of FTX Sam Bankman-Fried has said that the unlocked Grayscale Bitcoin Trust (GBTC) shares which could be sold sometime soon, may not affect the price of Bitcoin. According to the crypto derivatives exchange CEO, the possible GBTC push into the secondary market “does not matter much” for Bitcoin.
In a recent tweet, Bankman-Fried said that there might not be much impact on BTC because if people sell GBTC when it enters the market, most others will buy BTC against the GBTC. The Grayscale Bitcoin Trust runs on a mechanism that requires GBTC creators to hold all GBTC shares for at least six months before selling. The GBTC to be unlocked this July was part of the January set.
The Grayscale Bitcoin Trust offers access to the asset in a way similar to an exchange-traded fund (ETF). However, it does not have the approval of the US Securities and Exchange Commission (SEC). This means that access is restricted to accredited investors. However, back in April, Grayscale announced its intention to turn GBTC into a Bitcoin ETF. Bankman-Fried has, however, asked the general public to take his comment with a pinch of salt. In a subsequent tweet, the CEO said:
“Not investment advice, who knows, anything could happen”
Will GBTC Affect Bitcoin?
According to data aggregation service Bybt, the Grayscale unlock will see 16,240 BTC, about $560 million, released on July 18. By the end of the month, the total number of unlocked funds should hit 40,000 BTC, about $1.4 billion. Even with these large numbers, there is no conclusive prediction on how much GBTC will affect Bitcoin.
The research team at Kraken Intelligence published a report that somewhat corroborates Bankman-Fried’s position on the upcoming unlock. According to the report, GBTC will not affect BTC in the near future:
“Despite 40K BTC worth of GBTC shares unlocking in July, market structure suggests that the unlock will not weigh materially on BTC spot markets anytime soon, if at all, like some have claimed.”
Popular JPMorgan global market strategist Nikolaos Panigirtzoglou feels differently. The strategist believes that when the GBTC shares enter the open crypto market, the entrance would be bearish for Bitcoin:
“Selling of GBTC shares exiting the six-month lockup period during June and July has emerged as an additional headwind for Bitcoin.”
According to a recent Glassnode report, there is a considerable plunge in institutional interest in Bitcoin. The Glassnode publication suggests that the GBTC shares, now traded at a discount lower than Bitcoin itself, serves as proof of this disinterest. This is a sharp contrast to the previous market clime. Before now, investors paid a lot more money to buy GBTC shares.
Speaking to CNBC last month, Panigirtzoglou also confirmed that there is almost no institutional interest in Bitcoin in recent times. According to him, a lot of money is leaving, with institutional investors going away from their positions.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.