Cryptocurrency exchange Kraken has joined a number of analysts expressing doubts about the extent of the negative impact of the upcoming unblocking of a large volume of Grayscale trust shares on Bitcoin.
The Grayscale Bitcoin Trust allows institutional investors to access the cryptocurrency market through their shares and currently contains 654,600 BTC, or 3% of the total issued coins. Institutional investors can invest in a trust at net asset value for the subsequent resale of shares in the secondary market at a premium, but must wait six months before the securities are released to them for free disposal. Many Grayscale clients invested in the trust at the beginning of this year, so the waiting period for them will soon be over.
Since then, the Grayscale Trust share premium has moved into a discount that most crypto investors could not have foreseen. Earlier, JPMorgan analysts wrote in their report that a large volume of new securities entering the market could result in “negative pressure on GBTC share prices and the bitcoin market as a whole.”
Kraken Intelligence calculated that shares worth about 40,000 BTC, or $ 1.36 billion, are subject to unblocking in July.
“Despite the unlocking of 40,000 BTC in GBTC stock in July, the market structure suggests that this event will not have a meaningful impact on the bitcoin spot market for the foreseeable future, if at all, as some have stated,” the exchange wrote.
According to regulatory reports, most of the shares to be unblocked in July are owned by large investors. Kraken notes that such investors “presumably purchased GBTC shares with bitcoin in order to benefit from the premium relative to net worth.”
“Whether the GBTC buyers were market participants hedging a purchase by selling BTC, or new, natural buyers will ultimately determine the extent, if any, impact on cryptocurrency from the sale of GBTC shares,” the report said. …
JPMorgan strategist Nikolaos Panigirtzoglu wrote last month that the unblocking of GBTC shares carries risks of further decline in Bitcoin.
“The sale of GBTC shares after a six-month wait period in June and July emerged as an additional hurdle for Bitcoin,” he said.
Amber Group analysts previously argued that GBTC shares could have a positive impact on bitcoin if investors borrowed cryptocurrency and now buy it on the spot market to pay off creditors.