- A cryptocurrency exchange, Kraken, has joined a growing chorus of experts who predict that a flood of new Grayscale Bitcoin Trust (GBTC) shares reaching secondary markets could benefit bitcoin prices (BTC, -4.76 percent)
- According to a widely publicized JPMorgan study, GBTC unlocks might put negative pressure on GBTC prices and bitcoin markets in general
- According to Kraken, these massive corporations presumably purchased GBTC shares with BTC to profit from the premium to net asset value (NAV) that the shares were trading at
Kraken, a cryptocurrency exchange, has joined a rising chorus of experts who believe a surge of new Grayscale Bitcoin Trust (GBTC) shares reaching secondary markets would help bitcoin prices (BTC, -4.76 percent). The Grayscale Bitcoin Trust, the world’s largest digital asset fund, allows institutional investors to invest in bitcoin by purchasing shares in the trust, which currently has 654,600 bitcoins. This equates to roughly 3% of the entire bitcoin supply. (Digital Currency Group, which also owns CoinDesk, owns Grayscale.)
The fund’s net asset value – basically, the value of the underlying bitcoin – is available to institutional investors, but there is a six-month lockup period. Because so many investors invested into the trust early this year, many of the lockups are now coming to an end, allowing additional GBTC shareholders to sell their shares on the secondary market.
According to a widely circulated JPMorgan research, the GBTC unlocks might result in downward pressure on GBTC values and on bitcoin markets more broadly. However, other cryptocurrency experts and investors, like Amber Group and Arca Funds, believe that the GBTC unlockings will be beneficial to bitcoin prices. Recent data suggests that almost 40,000 BTC worth of GBTC shares will unlock in July, according to Kraken Intelligence.
Based on a bitcoin price of $34,000, this equates to roughly $1.36 billion. Despite the unlocking of 40K BTC worth of GBTC shares in July, market structure implies that the unlock will not have a substantial impact on BTC spot markets anytime soon, if at all, as some have suggested, according to Kraken Intelligence. Despite the unlocking of 40K BTC worth of GBTC shares in July, market structure implies that the unlock will not have a substantial impact on BTC spot markets anytime soon, if at all, as some have suggested, according to Kraken Intelligence.
According to regulatory records, big institutions control the majority of the shares that will be unlocked in July. These huge entities likely acquired GBTC shares with BTC to reap the premium to net asset value (NAV) that the shares were trading at, according to Kraken.
Whether these GBTC purchasers are market players who are hedging their purchases by selling BTC or are new, natural buyers will likely decide what influence, if any, the sale of GBTC shares has on the cryptocurrency, according to Kraken. Many of the shares that will likely be released in July are owned by large corporations, according to regulatory records. These large institutions presumably acquired GBTC shares using BTC to enjoy the premium to internet asset value (NAV) that the shares were purchasing and trading at, according to Kraken.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.