Bitcoin falls as another leader wobbles; This top fund is buying
Bitcoin briefly hit a new two-year low on Monday and dropped to nearly $15,600 in the afternoon as worsening liquidity problems fueled crypto concerns following the crash of FTX by Sam Bankman-Fried. Unconfirmed social media chat Over the weekend there were crypto industry sources, including a unit of the Digital Currency Groupquestions whether the venture capital giant could be the next crypto domino to crash.
DCG owns Grayscale Investments, the world’s largest crypto fund manager, Grayscale Bitcoin Confidence (GBTC). Grayscale holds more than 3% of the world’s Bitcoin. DGC also owns cryptocurrency broker Genesis Global Trading and digital asset news outlet CoinDesk.
Genesis warned that it may have to file for bankruptcy as it struggles to raise capital, Bloomberg reported Monday night. The Wall Street Journal reported on Thursday that the digital asset broker sought a $1 billion emergency loan last week. The firm halted withdrawals for its $2.8 billion crypto lender, Genesis Global Capital, on Wednesday after confirming liquidity problems following FTX’s bankruptcy filing. produce. The company announced “extraordinary withdrawal request” from the client exceeds its current ability to pay.
Two of Genesis’ biggest borrowers are Singapore-based crypto hedge fund Three Arrows Capital and FTX-affiliated trading company Alameda Research. Three Arrows Capital, Alameda and FTX are all in bankruptcy proceedings. Three Arrows Capital filed in July while Alameda and FTX filed jointly in November. DCG filed a $1.2 billion lawsuit against Three Arrows in court proceedings in July after Genesis released it. The company borrowed $2.3 billion.
On November 11, DCG transferred to Genesis $140 million worth of equity as FTX began to collapse.
And crypto exchange Gemini has halted withdrawals on interest-bearing accounts due to the announcement, as Genesis is the program’s lending partner.
Grayscale Bitcoin Trust Price Drops
grayscale announced that its products “continue to do business as usual and recent events have not impacted products or operations.” Grayscale states that Genesis Global Capital is not a partner or service provider for any of Grayscale’s products. In an SEC filing from October 3, Genesis was terminated as an authorized participant of GBTC but continues to act as its liquidity provider.
GBTC’s underlying assets and grayscale products are kept in separate wallets in cold storage by its custodian Coinbase (COIN), the company said. However, Grayscale declined to share the full proof of the reserve due to “security concerns”. On Friday, it shared a letter from Coinbase Custody Trust confirmed 635,235 Bitcoins in the archive.
“To put it completely plainly: BTC is under the Grayscale Bitcoin Trust which is owned by GBTC and GBTC separately,” Grayscale tweeted. Many online investors worry that DCG might start dumping its Bitcoin holdings to rescue Genesis. But Grayscale reassured investors that was not the case.
Meanwhile, Cathie Wood is buying GBTC at a discount. Ark Investment Management purchased over 315,000 GBTC shares worth approximately $2.8 million for the Ark Next Generation Internet ETF (ARKW) last Monday, Bloomberg reported.
GBTC stock fell to $8.32 by Monday’s close after falling 5.5% earlier in the day. The price has plummeted around 78% year-to-date as Bitcoin crashes with a wave of crypto bankruptcies. Shares are far below all-time highs near $58 since February 2021, before the current crypto ice age.
Meanwhile, Bitcoin has dropped nearly $15,600 from a low of $21,000 in early November after FTX went bust.
FTX’s demise explained
Exchange FTX has thrown the crypto market into turmoil over the past two weeks after filing for Chapter 11 bankruptcy on Nov. 11 Founder and CEO Sam Bankman-Fried has announced resigned and was replaced by John J. Ray III. Former Enron Cleaning Manager slam SBF says“Never in my career have I seen such a complete failure of control of the company and the complete absence of such reliable financial information.”
The fourth-largest crypto exchange by volume has been facing a massive liquidity crunch after it was revealed that its native FTT token makes up the bulk of a trading company’s balance sheet. Alameda Research sisters. Cryptocurrency exchange Binance has announced that it will liquidate its FTT holdings on November 6, raking in over $6 billion in FTX withdrawals within 72 hours.
Unpublicized at the time, Alameda Research owed FTX about $10 billion in loans formed from customer deposits. Meanwhile, FTX has invested user funds in various crypto projects and lesser-known tokens — some of which are Bankman-Fried’s own initiatives, deepening pay more attention to liquidity issues.
When FTX crashed, Bitcoin dropped nearly $15,800 from above $21,200 within four days, dragging the cryptocurrency price with it. Investors moved more than $3 billion in Bitcoin from exchanges to private wallets during the week of the FTX bankruptcy, Glassnode data compiled by CoinTelegraph shows. Bitcoin recovered to around $16,500 on November 17, but dropped again as more liquidity problems emerged. The price of the major cryptocurrency is still down 20% or more since FTX’s liquidity problems began on November 5.
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