$530M GBTC unlock in July won’t affect Bitcoin- QCP Capital

$530M GBTC unlock in July won't affect Bitcoin- QCP Capital
Image by Csaba Nagy from Pixabay

Key Takeaways

  • GBTC locked shares will be released in July.
  • Analyst at JP Morgan predict market distruption.
  • QCP Capital down writes predictions that Bitcoin BTC will be affected by the release.

YEREVAN (CoinChapter.com) — In a series of Tweets, crypto trading firm QCP Capital has analyzed why Bitcoin (BTC) will not be much affected after Grayscale Bitcoin Trust’s (GBT)16,000-BTC unlocking date. 

In the market update also released on their website on Wednesday, QCP down wrote fears that the Grayscale Bitcoin Trust (GBTC) will result in BTC’s price volatility in the coming weeks.

Read Also: Crypto market loses $78bn intraday as Bitcoin drops towards $32K.

What is GBTC?

The Grayscale Bitcoin Trust (GBTC) is the world’s largest Bitcoin fund. It allows investors to own BTC without actually buying the coveted digital currency. The trust also allows investors to buy BTC without worrying about storing it in a digital wallet. In addition, GBTC is the first fund of its kind to report financials regularly to the U.S. Securities and Exchange Commission (SEC). 

Investors owning shares in the trust can sell their stakes in the secondary market under the ticker GBTC. In addition, the belief is traded publicly on the OTCQX, an over-the-counter marketplace. 

For accredited investors who wish to secure shares of the Trust as private placements, the trust requires a minimum investment of $50,000. It also charges an annual fee of 2.0 percent. The minimum holding period of shares is six months, after which investors can sell the shares in secondary markets. The trust does not buy back GBTC from the investors, making them non-redeemable. 

Investors can also purchase as little as one share of the GBTC public quotation.

Unlike BTC, GBTC is directly available through traditional brokerages rather than a crypto exchange, making it a relatively more straightforward investment for those lacking knowledge in the industry. 

GBTC currently trades a little over $27.5 on the market. Credit: TradingView
GBTC currently trades a little over $27.5 on the market. Credit: TradingView

Also Read: Congressman Barry Moore misspells Ethereum in report filing

Fears over GBTC unlocking

The GBTC is due to unlock a large amount of BTC soon after a six-month lock-up period. Since a considerable chunk of BTC shares will suddenly enter the market, fears of possible market disruption were the talk of the town.
Analysts at JPMorgan, for example, viewed the development as possible trouble for the market, signaling bearish predictions.

JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note Wednesday.

Selling of GBTC shares exiting the six-month lockup period during June and July has emerged as an additional headwind for bitcoin.” 

In another report, experts predicted the market could get a boost in July from when the investor restrictions on the sale of shares in the Grayscale Bitcoin Trust (GBTC) expires.

Crypto services provider Amber Group had optimistic predictions, claiming that spot buying will discount the large sell-offs.

Also Read: Bitcoin HODling: What do Realised Cap HODL waves say about it?

BTC will likely remain unaffected

Despite the predictions, crypto trading firm QCP Capital remains optimistic about the GBTC shares entering the market later this month.

To state clearly — We don’t expect these unlocks on [their] own to have a significant impact on the overall market outside of GBTC itself. This is because most of the large institutional positions who had subscribed in-kind before have already been unlocked earlier, and they have held off selling at the current discounted price.” the report reads. 

On July 18, 16,240 BTC will become available on the market. Whether or not the Bitcoin market will be affected because of it remains to be seen. The Grayscale Bitcoin Trust currently owns 22.5b assents under its management.

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