Are Genesis GBTC Sells Starting?

First FTX, now Genesis. The delinquents of the last cycle still cast their shadow over the markets.

When will the GBTC selling finally end?

By any measure, the spot bitcoin ETF launch has been an incredible success, with billions of dollars of inflows in the first month alone. However, the opening days were marred by a wave of money exiting Grayscale's GBTC.

Hundreds of millions of dollars were pulled out of GBTC every day in the first couple of weeks of trading, as holders exited for options with lower fees, and to take profit after having their money locked up on Grayscale's fund for months. Additionally, GBTC held by FTX was sold to pay creditors who lost money when the exchange collapsed in 2022.

FTX Dumps GBTC
FTX has been a major contributor to GBTC sales, but there is more to come.

The outflows eventually slowed, dropping below the $100 million per day mark, but GBTC selling was one of the reasons why the market dipped in January.

More GBTC Selling Incoming?

Unfortunately, it looks like the GBTC dumping is set to continue a while longer. Outflows have increased once again. This time, the culprit may be Genesis.

Failed crypto lender Genesis holds around 35 million GBTC shares, worth around $1.3 billion. A bankruptcy court recently approved the sale of these assets, and it appears that the process of liquidating them may now have started.

The good news is that net inflows into the nine BTC ETFs (excluding GBTC) over the last couple of weeks have been extremely strong, averaging around half a billion dollars in this week's trading sessions so far. Genesis will sell its assets over a period of time, and the effect should be more than offset by new money coming in.

GBTC has seen more than 160,000 BTC exit the fund since it was converted to an ETF. The Genesis shares will account for around another 25,000 BTC. Overall, the nine new spot ETFs have been accumulating around 10,000 BTC per day in recent trading sessions.

Nonetheless, the process is yet another reminder of the excesses and fraud of the last cycle, and the long hangover that has accompanied the failure of a number of major crypto companies.


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