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Breaking News: Bitcoin Hits ATH Of $112,000, Expert Predicts Rally Is Just Beginning
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Breaking News: Bitcoin Hits ATH Of $112,000, Expert Predicts Rally Is Just Beginning

Genesis Bankruptcy by EOY Now At 59% – Sentiment Of Bitcoin Investors Pivots

Jake Simmons
Jake Simmons
1 year ago
2 mins read
Genesis DCG funding round Grayscale Bitcoin

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A possible Chapter 11 bankruptcy of Genesis Trading and parent company DCG is still depressing the sentiment on the Bitcoin market. Genesis last commented on Twitter on November 16. Parent company DCG last spoke out on November 18 via the social media platform.

Investors, however, seem to take a rather positive view of the silence. As recent data from the world’s largest decentralized prediction market Polymarket shows market participants now estimate the probability of a Genesis insolvency at only 59% by the end of year (EOY).

The peak value was 81%. Thus, the narrative appears to have pivoted to the extent that the problem is fixable for Genesis and DCG. Expert opinions currently suggest that it is more of a liquidity shortage than a solvency problem for DCG.

Genesis bankruptcy Bitcoin implications
Source: Twitter

Bitcoin Experts Warn Against False Panic

Bitcoin OG Samson Mow explained that the DCG group has real assets and income-generating businesses, and the problem is primarily a liquidity shortage.

According to Mow, Genesis and DCG have enough assets to pay debts, they’re just not available in cash. The worst-case scenario, a bankruptcy of Genesis and DCG “seems unlikely” for him.

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Since DCG has high revenues and assets, insolvency of Genesis would not be the end of the parent company. To that extent, Mow considers the theory that Grayscale could be liquidated and the 634,000 BTC could hit the open market also “an unlikely outcome.”

DCG still has a number of good assets, including Grayscale, which generates around $500 to $800 million a year in management fees. According to Mow, the likely outcome is a restructuring or an outright buyout by a bigger player.

Ryan Selkis, founder of Messari, currently strikes a similar tone. He also warns against scaremongering that DCG can simply “dump” its GBTC shares. “That’s part of their liquidity crisis, but also net good news for GBTC shareholders and FUD fighting,” Selkis said.

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The reason is that Grayscale has to follow strict rules. Thus, DCG cannot simply sell its nearly $800 million worth of GBTC shares because it is not an ETF as desired but a listed vehicle that falls under Rule 144.

Because of this, there are two important restrictions. DCG must make public a notice of proposed sales. Furthermore, there are caps on sales of 1% of outstanding shares or weekly trading volume.

Given GBTC has a daily volume of ~4.5mm shares that works out to quarterly cap on sales of 2.5mm shares ($23mm / quarter) under the trading test and 6.9mm shares ($62mm / quarter) under the asset test.

If Grayscale were to start forced sales, it would send the price of GBTC further down, and the discount would continue to grow. According to Selkis, this liquidity problem makes it much more likely that DCG-Genesis will refinance using GBTC as collateral.

At press time, Bitcoin was trading at $16,157. Thus, the next important resistance is currently at $16,310, while the support at $16,050 is of major concern.

Bitcoin BTC USD 2022-11-28
Bitcoin price, 1-hour chart. Source: TradingView
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Jake Simmons
Jake Simmons

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

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His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
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Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

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