FTX Sold About $1B of Grayscale's Bitcoin ETF, Explaining Much of Outflow: Sources
FTX's bankruptcy estate dumped 22 million shares of the Grayscale Bitcoin Trust, accounting for a significant portion of the fund's outflow.
FTX Sells $1B of Grayscale's Bitcoin ETF
Since the conversion of the Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund (ETF), investors have sold over $2 billion worth of shares. A large part of this sell-off was due to FTX's bankruptcy estate liquidating 22 million GBTC shares.
The approval of bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC) triggered the trading of these funds, but the GBTC had already existed for a decade. When the SEC approved its conversion into an ETF, along with the approval of 10 other bitcoin ETFs, billions of dollars worth of bitcoin were pulled out of GBTC.
FTX accounted for a significant portion of this outflow. The 22 million shares sold by FTX, which brought their GBTC ownership down to zero, were valued at close to $1 billion.
BTC's Price Fall and Selling Pressure
Since the approval of bitcoin ETFs, the price of BTC has fallen, causing a contrast with the previously high hopes and optimistic forecasts. However, now that FTX has completed the sale of its substantial GBTC holdings, the selling pressure could ease as the liquidation of an estate's holdings is a relatively unique event.
FTX, like other large crypto trading entities, took advantage of the price disparity between Grayscale trust shares and the net asset value of the underlying bitcoin. The value of FTX's GBTC holding rose from $597 million to around $900 million when Grayscale's bitcoin ETF trading began.
FTX held shares in multiple Grayscale trusts in a brokerage account at ED&F Man Capital Markets. The trading firm has since dismissed a lawsuit alleging excessive fees charged by Grayscale.
