This afternoon, a rumor about GBTC instantly ignited market discussions.
The source of the news comes from Autism Capital, an encrypted KOL that has been extremely active recently. It said that there are rumors in the market that Genesis, an encrypted trading and lending institution, may have solvency problems. In order to fill the hole, DCG, the parent company of Genesis, may choose to dissolve GBTC and ETHE issued by another company, Grayscale (Grayscale).
First of all, it needs to be explained that Autism Capital also stated in a personal tweet that the rumor is unconfirmed, and Odaily will continue to track the relevant progress. butsuppose, suppose, supposeIf this rumor is true, what does it mean? Why did the bankruptcy of Genesis involve GBTC and ETHE? After analysis, we made some guesses around six core issues:
Core question 1: How big is the hole?
First of all, the background of this incident is that Genesis has a certain funding hole. Previously, the agency also stated that $175 million in its derivatives department was trapped in FTX, but then DCG provided Genesis with an equity injection of $140 million.
A simple calculation shows that there is still a difference of 35 million U.S. dollars. If there is only such a small hole in the funds, it is obviously not enough to drag down the tens of billions of dollars of GBTC.
Then, if the rumors are true, it means that Genesis has other funding loopholes besides the 175 million US dollars, and the size of the loopholes has exceeded Genesis’s own capacity, and it will involve the interests of DCG’s decision-makers. DCG will Select "Abandon the car to save the death".
Core question 2: What does Genesis have to do with GBTC to repay its debts?
According to a report issued by the US SEC in October this yeardocumentIn addition to being a sister company of Grayscale, Genesis has previously participated in the distribution of GBTC as a distributor.
In addition, some news reports in 2021 also showed that after GBTC had a negative premium, DCG had bought a large amount of GBTC.
Therefore, one possibility can be guessed. In order to help Genesis fill the hole, DCG needs to use its own part of GBTC.
Core question three: Is it okay to sell GBTC directly?
Considering that GBTC currently has a large negative premium and limited market liquidity (an average of 4.75 million daily transactions, each currently reported at $9.68).
It can be guessed that it is difficult for the GBTC market to undertake the amount of chips that DCG wants to sell. Even if it is sold, it will wear out a great deal of value, so the sacrifice of directly selling GBTC is huge.
Core question 4: Can the BTC behind it be sold?
It should be noted that the BTC behind GBTC as the backing asset is currently stored in Coinbase Custody's cold wallet, and due to the nature of GBTC's fund, the fund currently does not support reverse redemption from GBTC to BTC.
There are two ways to exchange GBTC for the BTC in the cold wallet: one is to convert the fund nature of GBTC into a spot ETF (this is also the direction Grayscale has been working on); the other is to take the route of dissolution.
text
text
text
Obviously, the process will be long.
Core question 6: If it is dissolved, how will BTC be returned to GBTC investors?
The specific method will be decided by the fund share holders meeting with the participation of relevant stakeholders (fund managers, custodians, holders, etc.).
Considering that many investors who buy GBTC are special funds that cannot directly buy or hold BTC, it is not ruled out that they will choose the method of cash repayment, which means that Grayscale needs to sell part of the BTC reserves...you know what that means .
special clarification
All the above speculations are based on the fact that the rumor that "DCG will disband GBTC and ETHE to help Genesis" is true, just to help readers sort out some potential logical relationships, but as far as the current situation is concerned, the probability of this event happening is not not tall.
How this matter will eventually develop still needs to wait for the results of the creditors' meeting that Genesis will hold at 8:00 on November 17, US Eastern Time (21:00, November 17, Beijing time).
