Whether a possible sell-off of shares tied to a multi-billion dollar Bitcoin [BTC] investment fund could crash the cryptocurrency’s spot prices has become a new debated topic among the analysts within the space.
The argument concerns Grayscale Bitcoin Trust, the world’s leading crypto assets manager that permits institutional investors to gain indirect exposure within the Bitcoin market via its product, GBTC. Investors purchase GBTC shares directly via Grayscale in daily private placements by paying in either Bitcoin [BTC] or the USD.
Moreover, investors can sell their GBTC shares solely after a 6-month lockup period in secondary markets to other parties. Additionally, they anticipate liquidating at a premium when the market value at the time of sale crosses above the NAV [Native Asset Value].
While on the other hand, liquidating GBTC shares when the market value has dipped beneath the NAV brings losses. So if investors plan to dump their GBTC holdings, they might need to do so for a financial casualty. That’s because the share has been trading at a reduction, i.e., under its NAV, since 24th February, this year.
Some analysts, along with strategists at JPMorgan, believe that accredited investors will sell a min of some of their GBTC holdings after the July unlocking period, thus weighing further on the continued Bitcoin market downtrend.
“Despite this week’s correction, we are reluctant to abandon our negative outlook for Bitcoin and cryptocurrency markets more generally. So despite some improvement, our signals remain overall bearish,” added Nikolas Panigirtzoglou, the lead strategist at JPMorgan, within an official note to clients.
Nevertheless, other analysts believe that the event will flush sellers from the market earlier in July, opening up both volatility and bullish potential to interrupt new all-time highs.