Bitcoin Drops As Another Leader Fluctuations; This top fund buy
Bitcoin briefly hit a new two-year low on Monday and fell below $15,500 by the afternoon as worsening liquidity woes raised concerns about the cryptocurrency following the collapse of Sam Bankman-Fried’s FTX. Unconfirmed gossip on social media Over the weekend, there were sources in the cryptocurrency industry, including a unit of the Digital Currency Group, wondering if the venture capital giant might be the next crypto domino to crash.
DCG Grayscale Investments, and manager of the world’s largest crypto fund, owns Grayscale bitcoin box (GBTC). Grayscale holds over 3% of the world’s bitcoin. DGC also owns crypto broker Genesis Global Trading and digital asset news outlet CoinDesk.
Genesis has warned that it may need to file for bankruptcy as it struggles to raise capital, Bloomberg reported Monday night. The Wall Street Journal reported Thursday that the digital asset brokerage firm sought a $1 billion emergency loan last week. The company halted withdrawals for its $2.8 billion crypto lending unit, Genesis Global Capital, on Wednesday after confirming liquidity issues in the wake of FTX’s bankruptcy filing. The The company announced Abnormal withdrawal requests from clients that exceed current liquidity.
Two of Genesis’ largest borrowers were Singapore-based crypto hedge fund Three Arrows Capital and FTX trading firm Alameda Research. Three Arrows Capital, Alameda and FTX are in bankruptcy proceedings. Three Arrows Capital filed in July while Alameda and FTX filed together in November. DCG filed a $1.2 billion claim against Three Arrows in court proceedings in July after Genesis loaned the company $2.3 billion.
On November 11, DCG gave Genesis a $140 million stock infusion as FTX began to implode.
Cryptocurrency exchange Gemini has paused withdrawals on interest-bearing accounts as a result of the announcements, as Genesis is the program’s lending partner.
Bitcoin trust price drop in greyscale
Grayscale announced that its products “continue to operate as normal, and recent events have had no impact on product or operations.” Grayscale says that Genesis Global Capital is not a counterparty or service provider to any Grayscale product. In an SEC filing as of Oct. 3, Genesis was terminated as an authorized participant of GBTC but continued to act as its liquidity provider.
GBTC’s grayscale products and underlying assets are held in separate cold storage wallets by the custodian Coinbase (COIN), the company said. However, Grayscale has refused to share its full proof of reserves due to “security concerns”. On Friday, I shared a letter from the Coinbase Custody Trust To confirm the storage of 635,235 bitcoins.
“To be absolutely clear: Grayscale’s BTC core bitcoin fund is owned by GBTC and GBTC alone,” Grayscale tweeted. Many online investors are concerned that DCG will start dumping its bitcoin holdings to save Genesis. But Grayscale reassures investors that’s not the case.
Meanwhile, Cathy Wood buys GBTC at a discount. Ark Investment Management purchased more than 315,000 shares of GBTC worth about $2.8 million for the Ark Next Generation Internet ETF (ARKW) last Monday, Bloomberg reported.
GBTC stock fell to $8.32 by Monday’s closing bell after falling 5.5% earlier in the day. The price is down nearly 78% so far this year as Bitcoin collapses along with a wave of cryptocurrency bankruptcies. Shares were well below their all-time highs near $58 from February 2021, before the current cryptocurrency ice age.
Meanwhile, bitcoin has fallen near $15,600 from as low as $21,000 in early November after the FTX bankruptcy.
Explanation of the breakdown of FTX
FTX exchange has caused turmoil in the cryptocurrency markets in the past two weeks after it filed for Chapter 11 bankruptcy on November 11. The former Enron executive clean-up criticized the SBF, saying, “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information.”
The fourth-largest crypto exchange by volume faced a massive liquidity crunch after it was revealed that its native FTT token made up the majority of sister business Alameda Research’s balance sheet. Crypto exchange Binance announced that it will liquidate its holdings from FTT on November 6, resulting in the withdrawal of more than $6 billion from FTX within 72 hours.
Not publicly known at the time, Alameda Research owed FTX about $10 billion in loans made up of customer deposits. Meanwhile, FTX invested users’ money in several lesser-known crypto and token projects — some of which were Bankman-Fried’s own initiatives, exacerbating liquidity issues.
With the collapse of FTX, Bitcoin fell near $15,800 from above $21,200 in four days, dragging cryptocurrency prices down with it. Investors have moved more than $3 billion in Bitcoin from exchanges to personal wallets in the week of the FTX bankruptcy, Glassnode data compiled by CoinTelegraph shows. Bitcoin has reclaimed around $16,500 as of November 17, but has fallen again as more liquidity issues come to light. Major cryptocurrency prices are still down 20% or more since FTX’s liquidity issuances began on November 5.
Want market guidance information delivered straight to your inbox? Sign up for our new daily IBD newsletter by clicking on the image below.
You can follow Harrison Miller for more stock news and updates on Twitter @tweet
You may also like:
Cryptocurrency prices and news
What is cryptocurrency?
Get stock listings, stock valuations and more with IBD Digital
Find stocks to buy and watch with IBD Leaderboard
Set the rules and buy points with MarketSmith’s pattern recognition
#Bitcoin #Drops #Leader #Fluctuations #top #fund #buy