FTX Bankruptcy Causes $1 Billion GBTC Outflow
The ongoing bankruptcy proceedings for crypto exchange FTX have resulted in a significant sell-off from the Grayscale Bitcoin Trust (GBTC) fund. FTX’s bankruptcy estate sold 22 million shares of GBTC, amounting to approximately $1 billion in outflows.
FTX Had Major GBTC Holdings
According to a November 2023 filing, FTX held 22.3 million shares of GBTC worth nearly $600 million. The stake increased to over $900 million after GBTC’s conversion to a spot Bitcoin ETF.
FTX prioritized raising cash by unwinding its investments, including its GBTC holdings. As one of the largest shareholders of GBTC, FTX had benefited from the premium between the trust’s share price and its underlying BTC holdings. However, this premium disappeared after the conversion.
FTX’s Sell-Off Impacts Bitcoin ETFs and Funds
With FTX’s bankruptcy estate exiting its position, GBTC may experience a reduction in selling pressure. However, the massive outflows and investor exodus have already cast doubt on the belief that Bitcoin ETFs would attract new inflows and institutional capital.
The bankruptcy also led FTX’s trading affiliate, Alameda Research, to drop its lawsuit against Grayscale over excessive fees. The $1 billion unwinding of FTX’s position has hindered the adoption of products like GBTC.
Hot Take: FTX’s Bankruptcy Estate Triggers $1 Billion GBTC Outflow
The bankruptcy proceedings of FTX have caused significant repercussions in the crypto market. The sale of 22 million GBTC shares by FTX’s estate resulted in a $1 billion outflow from the fund. This sell-off has had a negative impact on Bitcoin’s price and has raised concerns about the effectiveness of Bitcoin ETFs in attracting institutional capital. FTX’s decision to unwind its GBTC holdings has also affected other market participants, such as Alameda Research, which dropped its lawsuit against Grayscale. Overall, FTX’s bankruptcy estate has played a pivotal role in shaping the current state of the crypto market.
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