The ftx drop It brought a lot of problems to the entire cryptocurrency market, mainly the fear that the situation could repeat itself and, unfortunately, this is a possibility.
The world’s largest bitcoin fund, GBTChas raised many concerns that it may be about to crash, as a result of the ripple effect caused by FTX.
GBTC, or Grayscale Bitcoin Investment Trustis a bitcoin investment fund controlled by grayscale, one of the leading names in the cryptocurrency market. With operations in Delaware, one of the most industry-friendly states in the US, GBTC has 635,000 bitcoins.
One of the points that has been worrying some is how these bitcoins are stored. Grayscale itself does not store cryptocurrency.outsourcing this function to the largest crypto platform in the US, coinbase.
However, this large amount of bitcoins does not stay on the exchange either, but on a second service with cold wallets.
GBTC in crisis
The FTX collapse it is directly related to the way in which client funds were not properly managed or used to cover the deficit of Alameda Research, the sister company of FTX. Could GBTC fall into the same trap?
The problem lies precisely in Grayscale’s lack of responsiveness and transparency. After FTX’s demise in November, Grayscale refused to disclose information about its reserves, saying custody of its assets was held by Coinbase.
In the midst of one of the biggest market crises, caused by the lack of transparency of several companies, Grayscale’s refusal did not inspire confidence.
At the same time, the GBTC fund is “discounted”, being “bitcoin sold” at half price, demonstrating the devaluation of the investment fund against real currency.
In a nutshell: trust is low and Grayscale is not doing much to address the situation.
And if Grayscale goes bankrupt, what happens?
While everyone worries that Grayscale’s mutual fund could end in disaster, it’s important to understand why this is particularly dangerous.
If Grayscale shuts down its two main funds, more than 3 million Ethereum and more than 630,000 bitcoins could be thrown into the market. With the current low liquidity and negative expectations, the appearance of such a large amount in free sale could trigger a real meltdown.
The idea behind the dynamics of supply and demand will be virtually wiped out beyond recovery. Almost no one will have more than 3,000 million dollars to get all these coins out of circulation.
With that, the bitcoin price could fall further. Taking into account the delicate moment that the cryptocurrency market is going through, any “wobble” of this type, even if it is only a scare, considerably affects the price.
Grayscale is one of the largest companies in the market and it seems to have no reason to collapse. But it is worth remembering that FTX was the third largest cryptocurrency exchange in the world.
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