Grayscale Bitcoin Trust (GBTC)

Grayscale Bitcoin Trust (GBTC) stock dropped by 3.22% due to FTX, a prominent player in the cryptocurrency market, has reportedly sold approximately $1 billion worth of GBTC shares. This sizable offloading of 22 million shares from FTX's bankruptcy estate contributed significantly to the exodus of investors from GBTC. Below are the key details about the FTX's substantial GBTC sales.

• The Context of Bitcoin ETFs: The decline in GBTC's value occurred following the approval and subsequent trading of spot bitcoin ETFs on January 11, a milestone achieved after years of regulatory delays. GBTC had already been in existence for a decade, structured as a closed-end fund. However, when the U.S. Securities and Exchange Commission (SEC) approved its conversion into an ETF, along with endorsing the creation of ten new bitcoin ETFs, GBTC had amassed nearly $30 billion in assets.
• BTC Price Movement: Despite high expectations for bitcoin's price to rise with the introduction of bitcoin ETFs, BTC's value has actually decreased. This contrasted sharply with the optimism surrounding the SEC's decision to approve bitcoin ETFs, which were seen as a more accessible investment avenue for the general public. As GBTC is a Bitcoin ETF, any movement in BTC's price could have a direct impact on its stock price.
• FTX's Role and Impact: FTX played a significant role in the outflow of funds from GBTC, with the sale of 22 million shares representing a value close to $1 billion. Now that FTX has completed its substantial holdings liquidation due to its bankruptcy estate situation, it is expected that selling pressure on GBTC may ease. This event of a bankruptcy estate liquidating holdings is considered relatively unique in the market.