Will Bitcoin Price Fall If Genesis Files Bankruptcy? Here’s What We Know

1 year ago

After the DXY fell intra-day to a caller 7-month debased of 101.56 yesterday, the Bitcoin terms concisely managed to tackle the cardinal absorption portion supra the $21,500 mark, reaching its highest level since September 13, 2022, astatine $21,650. However, the euphoria did not past agelong for 2 reasons.

First, the DXY showed a beardown bounce, and second, quality became nationalist that Genesis Trading could beryllium preparing for bankruptcy. This has stoked caller fears that the contagion successful the crypto marketplace could rotation connected aft the FTX bankruptcy successful November. But what is known truthful acold and what could this mean for the Bitcoin price?

Here’s What’s Known

According to a Bloomberg report yesterday, Genesis Trading, a subsidiary of crypto mogul Barry Silbert’s DCG empire, is facing bankruptcy. If the study proves true, the bankruptcy filing could travel arsenic aboriginal arsenic this week, according to Bloomberg.

Faced with a deficiency of liquidity, Genesis is presently successful confidential negotiations with assorted creditor groups. Genesis and DCG person reportedly exchanged respective proposals with creditors, but person truthful acold failed to scope an agreement.

Genesis is moving connected a restructuring plan, according to informed sources. Some creditors seemingly would beryllium consenting to judge a premix of currency and stock certificates from DCG.

However, the woody whitethorn not beryllium acceptable yet, arsenic Bloomberg reported yesterday. According to crypto writer Samuel Andrew, citing sources adjacent to DCG, talks are continuing and plans could inactive change. Andrew wrote today:

UPDATE: The Genesis Trading quality regarding a ‘pre-packaged bankruptcy’ is being refuted by respective Genesis creditors that matter. **several sources assertion that DCG/Genesis is leaking the pre-packaged bankruptcy communicative to unit an agreement. Quote, ‘…far from a done deal.’

What Impact Will It Have On The Bitcoin Price?

The interaction of a Genesis bankruptcy connected the Bitcoin terms volition apt beryllium mostly connected whether DCG volition find a woody with Genesis’ creditors oregon whether DCG volition beryllium dragged into bankruptcy with them.

Although details are not yet available, it seems apt that a “pre-packaged” woody could forestall a large marketplace interaction connected Bitcoin terms by preventing DCG’s insolvency and liquidation of Grayscale.

If there’s nary deal, this could arguably effect successful the “cash cow” Grayscale having to beryllium sold oregon DCG being forced to liquidate ample chunks of its Grayscale Bitcoin Trust (GBTC) holdings. This is owed to the information that DCG owns Genesis money. The loans are $575 cardinal owed successful 2023 and different $1.1 cardinal promissory enactment owed successful 2032 to Genesis.

However, determination are respective factors inactive unclear. Thus, it’s inactive not wide if a Genesis bankruptcy volition automatically effect successful DCG going down, depending connected the question of if they tin rise capable funds. Also, the liquidation of GBTC isn’t an casual task arsenic it comes with precocious ineligible hurdles and requires the SEC’s approval.

Accordingly, crypto influencer Lark Davis besides commented via Twitter, “No denotation yet connected however this volition impact DCG oregon the Grayscale Bitcoin and Ethereum Trusts.”

Hypothetically speaking, a liquidation of the full GBTC could mean a monolithic dump if much than 630,000 BTC were flushed into the inactive illiquid market. Even if the liquidation were to instrumentality spot implicit a play of respective months, specified selling unit would apt thrust the Bitcoin terms importantly down.

At property time, the Bitcoin terms remained comparatively unchangeable contempt the rumors and stood astatine $20,802.