After FTX, it's Genesis' turn to sell its shares in the Bitcoin ETF GBTC

The liquidation of Genesis is expected to soon end the recent lull in the Grayscale Bitcoin ETF market.

Genesis wants to liquidate its bitcoins

The bankrupt company Genesis filed a court petition on Friday, February 02, to authorize the sale of over $1.6 billion in bitcoin (BTC), ether (ETH), and ethereum classic (ETC).

More specifically, the request involves $1.4 billion in bitcoin, $165 million in ethereum, and $38 million in ethereum classic.

These funds were invested with Grayscale on behalf of clients of the Gemini Exchange who had invested in its “Earn” program…

Earn Update: Late yesterday, Genesis filed a Motion Authorizing Sale of Trust Assets. This is an important step forward following the approval of the Grayscale Bitcoin Trust (GBTC) as an exchange-traded product (ETP) on January 10th. As detailed in the motion, Genesis is seeking…

— GeminiTrustCo (@GeminiTrustCo) February 3, 2024

The petition asks that the Gemini exchange be allowed to monetize the 30 million shares in the GBTC ETF held as collateral on behalf of its users.

The hearing about this petition will take place on February 8. The liquidation can then begin in order to reimburse Gemini’s customers.

If the New York courts authorize the liquidation, the withdrawals from the GBTC ETF will resume just when they had finally begun to wane in the last few days. This will result in renewed downward pressure on BTC/USD.

Downward pressure expected on BTC/USD

Here is a summary of the daily outflows since the ETF’s launch (in millions of dollars):

#GBTC outflows are still out muscling inflows. pic.twitter.com/N0Q3CVlNpY

— Pav 🇦🇺 (@pavhundal) February 6, 2024

Altogether, Grayscale has sold about 141,000 bitcoins (~$6 billion) since January 11. Partly because of FTX’s bankruptcy, which took advantage of the ETF frenzy to liquidate its bitcoins. In total, a billion dollars, which is about 24,000 bitcoins at the current rate.

The rest comes from clients packing their bags due to management fees eight times higher than the competition.

However, these withdrawals from the GBTC ETF are more than offset by ETFs from BlackRock, Fidelity, etc., amounting to over 175,000 bitcoins in total. It remains to be seen whether this will continue to be true next week if Genesis’s shares are liquidated.

Genesis and Grayscale are key companies in the Digital Currency Group empire, which also controls Foundry, the world’s largest mining pool. The biggest creditor of Genesis is the Gemini exchange. Over 100,000 of its users are affected by its bankruptcy.