How the unlocking of 40 thousand bitcoins in July, which secure the units of the Grayscale Bitcoin Trust, may affect the crypto market quotations and why institutional investors will not sell GBTC.
In July, the six month period for which the units of the Grayscale Bitcoin Trust (GBTC) are blocked ends. This means that investors will have the opportunity to sell their shares, backed by the first cryptocurrency (Bitcoin), which they purchased at the beginning of the year.
According to the Bybt service, about 40 thousand bitcoin will be unlocked in July ($ 1.4 billion at the exchange rate as of July 12).
The Grayscale Bitcoin Trust units have a deferred redemption mechanism. Owners of GBTC must hold them for six months before they can sell.
The Grayscale Bitcoin Trust functions similarly to an ETF, but is not registered with the US Securities and Exchange Commission (SEC), so only accredited investors have access to it.
Sam Bankman Freed , CEO of the FTX cryptocurrency derivatives exchange, spoke about the possible sale of GBTC shares . In his opinion, unlocking and their possible subsequent sale of shares in the secondary market “does not matter much” for the bitcoin rate.
remember: most GBTC creators are doing arbs; most people getting long are buying in markets.
so the unlock prob doesn't really matter for BTC, if people sell GBTC most will buy BTC against it. https://t.co/w8Stpht4Jf
— SBF (@SBF_Alameda) July 12, 2021
At the end of June, analysts at the investment bank JPMorgan predicted that the value of bitcoin could fall to $ 25,000 as a result of a possible sale of GBTC shares.
The bank’s representatives claim that they maintain a negative outlook for bitcoin despite the fact that its price returned to $ 34 thousand after falling to $ 28.8 thousand on June 22.
Fall is possible
If there is a strong sale, some of the retail investors on the crypto market may decide that this is a panic and a signal to exit the asset, predicted Mikhail Karkhalev, financial analyst at the Currency.com crypto exchange.
In such a situation, according to the analyst, we will see a decline to $ 30 thousand (12%) with a subsequent recovery, since large investors are buying all the coins at this level.
Viktor Pershikov, the main analyst at 8848 Invest, predicted a short-term drop in quotes to $ 27-28 thousand (21 percent). According to him, fundamental issues like as a decline in the hash rate, challenges, limited volumes of Bitcoin purchases by significant market participants, and persisting political dangers will all impact this.
On June 22, the value of bitcoin for the first time since January fell to $ 28.8 thousand. This happened against the backdrop of negative news from China, which miners began to leave due to the tightening of regulation of the cryptocurrency industry.
At the end of June, more than 70% of miners turned off their equipment in order to move to other countries.
“Globally, the situation remains positive and by the end of the year, an increase in the capitalization of bitcoin and a rise in the price of the coin to the $ 50 thousand mark is forecasted,” added Pershikov.
Another model of behavior
According to Karkhalev, the bulk of retail investors now overreact to even minor incidents. Institutional investors, in his opinion, follow a distinct model of behavior, and they are unlikely to behave like Bounty program participants or hunters for “xx” during the ICO, who sold their assets as soon as they received them.
“Some of the shares may be sold and, perhaps, this will slightly affect the BTC rate, but something supernatural is unlikely to happen,” the analyst concluded.
The influence of the possible sale of GBTC shares by investors is already included in the quotes, added Pershikov.
In his opinion, the demand of institutions for this instrument remains, which means that the next stage of the supply, which will begin on July 19, may cause a “bullish” rather than a “bear” effect.