In the nearly two weeks since the launch of the Bitcoin spot ETF, Bloomberg ETF analysts James Seyffart and Eric Balchunas have teamed up to write “FTX and DCG Sales Likely Underpin Grayscale Bitcoin ETF Outflows.” In addition to analyzing the situation of FTX and DCG dumping GBTC, they also summarize the situation after the launch of the Bitcoin spot ETF.
Table of Contents:
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FTX has actually completed the selling
DCG is the largest holder
Galaxy and Marex play important roles in liquidation
GBTC selling pressure causes a 1% discount
GBTC has the smallest price difference, indicating its operational efficiency
Since Grayscale’s GTBC fund successfully transformed into a Bitcoin spot ETF, the price of Bitcoin has continued to decline, and it was recently reported that the cryptocurrency exchange FTX has sold nearly $1 billion worth of the company’s stock.
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Bitcoin fell below $40,000 this morning, is it due to FTX dumping GBTC?
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According to the Bloomberg report, FTX’s dumping should have ended, and it is estimated that the amount of this wave of dumping is around $8-9 million, which is not far from our previous report.
The report also points out that FTX still holds GDLC, LTCN, ETCG, and ETHE from Grayscale. However, Bloomberg analysts believe that because ETHE has the opportunity to transform into an Ethereum spot ETF this year, FTX should temporarily retain ETHE and liquidate the other three funds first. From their price performance, GDLC, LTCN, and ETCG have been affected.
According to the latest statistics at the time of the report’s release, GBTC outflows reached $3.45 billion. Besides FTX, who are the other sellers?
The largest “known” holder of GBTC is actually its parent company, DCG. It holds 35.94 million shares of GBTC, worth $1.27 billion. The company has been in financial crisis in recent years, and if DCG did not participate in this sell-off, even analysts would be surprised. If we estimate the maximum value, FTX and DCG could contribute $2.4 billion to the outflows.
FTX has designated Galaxy as the clearing agent. Galaxy has actually participated in the Bitcoin spot ETF BTCO together with Invesco. Bloomberg’s report points out that Marex Capital Markets, an Authorized Participant, played an important role in this clearing.
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GBTC is still at a 1% discount, indicating selling pressure. Other Bitcoin spot ETFs have benefited from buying interest and have a premium of 0.36% to 0.7%. However, analysts believe that this discount/premium will gradually decrease as the efficiency of arbitrage by future participants improves.
However, looking at the price difference between GBTC and IBIT from BNY Mellon and FBTC from Fidelity, GBTC actually has the smallest price difference, indicating that it has not encountered trading issues after the ETF listing.
The author believes that as a market pioneer, we can also see the scale and efficiency of Grayscale’s management. It’s no wonder the CEO of Grayscale is so confident in their products and insists on not reducing fees. As for the future of GBTC, will it be pressured by competitors to reduce costs? Can the Bitcoin spot ETF continue to attract the attention of traditional investors and become an enduring investment product? Let’s find out together!
DCG
Eric Balchunas
FTX
GBTC
James Seyffart
Bloomberg
Bitcoin spot ETF
Further reading
US Financial Industry Regulatory Authority: 70% of cryptocurrency companies engage in violations, product descriptions include exaggeration and misleading content
Funds can now successfully withdraw, FTX withdraws lawsuit against Grayscale.