In addition to the macroeconomic headwinds, there are two main concerns when it comes to crypto right now: Binance and DCG. The situation around Genesis Trading, Digital Currency Group (DCG) and Grayscale, which is still unresolved after a month, is depressing market sentiment around Bitcoin.
As reported according to the Wall Street Journal, information has now leaked again that could be a double-edged sword for investors. Grayscale CEO Michael Sonnenshein said the company would explore new options to return some of the Grayscale Bitcoin Trust’s capital to shareholders as the GBTC is currently trading at a record 49% discount to the net asset value (NAV).
That option is under discussion if the company fails to convert the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund, according to a letter to investors.
As reported by WSJ, the option could include a public offer for up to 20% of the trust’s $10.7 billion outstanding shares. A takeover bid would be a direct appeal to shareholders to sell their shares at a certain price within a certain time period.
The U.S. Securities and Exchange Commission has repeatedly denied Grayscale’s applications to convert GBTC into a spot ETF, which is why Sonnenshein is now considering the move. In June, Grayscale sued the SEC just hours after his ETF application had been rejected. Last week, the SEC responded to the lawsuit for the first time, reiterating its position in a filing.
Grayscale accuses the SEC of double standards in allowing futures ETFs to enter the market and repeatedly rejecting proposals for ETFs investing in spot Bitcoin. The SEC’s rationale is that futures ETFs are closely monitored by the Chicago Mercantile Exchange. Spot Bitcoin ETFs, on the other hand, lack this level of government oversight, the plea argues.
What a partial sell-off of GBTC would mean for the market remains to be seen due to a lack of detailed information on the framework. But the breakup of GBTC, which holds more than 643,000 BTC, is one of the biggest concerns of investors.
Meanwhile Sonnenshein emphasized:
Grayscale products, including GBTC, remain safe, secure and unencumbered. We remain steadfast in our belief that the conversion of GBTC to an ETF is in the best interest of investors and we remain 100% committed to that pursuit.
Bitcoin price is above $16,700
Despite the news, Bitcoin price remained stable above USD 16,700 at the time of writing. As recently as Friday, the broader crypto market experienced a sell-off after rumors surfaced that DCG may sell assets like NEAR, Filecoin, and Ethereum Classic on a larger scale.
However, apart from falling prices, there was no evidence to back this up. Nevertheless, there were some crypto Twitter analysts speculating about a sell-out by Grayscale’s parent company.
Several cryptos related to Barry Silbert’s DCG have been selling aggressively this evening (FIL, ZEN, ETC, NEAR), leading many speculators to question whether the sale is derived from DCG itself. pic.twitter.com/M9mkQrEI7q
— Will Clemente (@WClementeIII) December 16, 2022
At the time of writing, Bitcoin price was at $16,720. So BTC is at a critical level. Bitcoin should break through $16,900 and begin a continuation above $17,300. If there is no breakout, the $16,200 and $15,500 regions should provide support.