Investors have sold more than $2 billion of Grayscale Bitcoin Trust (GBTC) since it was converted into an exchange-traded fund earlier this month.
Much of that exodus was due to FTX's bankruptcy, which dumped 22 million shares, according to private data reviewed by CoinDesk and two people familiar with the matter.
A slew of Bitcoin exchange-traded funds began trading on January 11 after the US Securities and Exchange Commission finally approved them after years of delays. But Grayscale's fund had already been around for a decade — and was structured as a less attractive closed-end fund — and had amassed nearly $30 billion in assets when the SEC agreed to turn it into an ETF, along with the blessing of 10 Bitcoin ETFs that had been established. Newly created.
While new money, issued by the likes of BlackRock and Fidelity, has seen inflows, billions of dollars worth of bitcoin has been withdrawn from GBTC.
Data seen by CoinDesk suggests that FTX is responsible for a large portion of this. The 22 million shares it sold – which reduced GBTC's ownership in FTX to zero – amounted to nearly $1 billion.
Bitcoin (btc) The price has fallen since the ETFs were approved — a stark contrast to the high hopes people had before the SEC announced its decision. Bitcoin ETFs have been touted as a much easier way for ordinary people to invest in Bitcoin, which has led to very optimistic predictions about the price of Bitcoin.
Instead, Bitcoin fell. In theory, now that FTX has finished selling its large holdings, the selling pressure could ease since liquidation of bankruptcy holdings is a relatively unique event.
Like many large cryptocurrency trading entities, FTX profited from the disparity between the price of Grayscale Trust shares and the net asset value of the fund's underlying bitcoin. FTX holds 22.3 million GBTC, worth $597 million as of October 25, 2023. According to the deposit From November 3, 2023.
The value of FTX's GBTC holding has risen to about $900 million, based on the first day of trading for Grayscale's Bitcoin ETF on NYSE Arca on January 11, when it closed the trading session at $40.69.
FTX owns shares in five Grayscale Trusts (as well as nearly 3 million shares in a statutory trust managed by ETF provider Bitwise) in a brokerage account at ED&F Man Capital Markets, which is now known as Marex Capital Markets Inc., according to filings.
Marx declined to comment. Galaxy Digital, a cryptocurrency trading firm helping to sell assets owned by bankrupt FTX, also declined to comment.
On Monday, Alameda Research — a trading firm associated with FTX — voluntarily dismissed a lawsuit alleging that Grayscale charged excessive fees.
Steven Alpher contributed reporting.
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