After the DXY fell to a 7-month low of 101.56 yesterday, Bitcoin briefly managed to break through a key resistance zone above the $21,500 mark, its highest level since September 13, 2022 at $21,650. Arrived at However, this happiness did not last long for two reasons.
First, DXY showed a strong bounceAnd second, news broke that Genesis Trading was preparing for bankruptcy. This has given rise to new concerns that the crypto market may grow after the contagion. FTX Bankruptcy in November. But what is known so far and what could it mean for Bitcoin’s price?
Here is what is known.
According to Bloomberg Reports Yesterday, Genesis Trading, a subsidiary of crypto mogul Barry Silbert’s DCG empire, faced bankruptcy. According to Bloomberg, if the report is true, the bankruptcy filing could come as early as this week.
Faced with a lack of liquidity, Genesis is currently in secret talks with various creditor groups. Genesis and DCG have reportedly exchanged several proposals with lenders, but have so far been unable to reach an agreement.
According to informed sources, Genesis is working on a restructuring plan. Some lenders will apparently be willing to accept a mix of cash and share certificates from DCG.
However, the deal may not be ready yet, as Bloomberg reported yesterday. According to crypto writer Samuel Andrews, citing sources close to DCG, discussions are ongoing and plans could still change. Andrew wrote Today:
Update: News of Genesis trading in ‘prepackaged bankruptcy’ has been dismissed by several of Genesis’ creditors, which is significant. **Multiple sources claim that DCG/Genesis is leaking a pre-packaged bankruptcy narrative to force a deal. Quote, ‘…far from a done deal.’
How will this affect the price of Bitcoin?
The impact of the Genesis bankruptcy on the price of Bitcoin will likely depend on whether DCG will reach an agreement with Genesis’ creditors or whether DCG will be dragged into bankruptcy with them.
Although details are not yet available, it appears that the “prepackaged” deal could prevent a major market impact on the price of bitcoin by preventing DCG’s bankruptcy and grayscale liquidation.
If no deal is reached, this could result in “cash cow” grayscale having to be sold or DCG being forced to liquidate a large portion of its grayscale bitcoin trust (GBTC). This is due to the fact that DCG owns the Genesis Zodiac. The loans are due for $575 million in 2023 and Genesis has another $1.1 billion promissory note due in 2032.
However, several factors are still unclear. Thus, it remains unclear whether Genesis bankruptcy will automatically result in DCG going down, depending on the question of whether they can raise sufficient funds. Also, delisting GBTC is not an easy task as it comes with high legal hurdles and requires SEC approval.
Accordingly, so does crypto influencer Lark Davis Commented via Twitter, “No indication yet how this will affect DCG or Grayscale Bitcoin and Ethereum Trust.”
Hypothetically, if more than 630,000 BTC were dumped into the steel, wiping out the entire GBTC could mean a massive dump. Illegal market. Even if liquidation were to occur over a period of several months, such selling pressure would likely drive the price of Bitcoin significantly lower.
At press time, despite the rumors, the price of Bitcoin remained relatively stable and stood at $20,802.
Featured image from Behnam Norouzi / Unsplash, chart from TradingView.com
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