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⚡FTX Unloads $1 Billion in Grayscale Bitcoin ETF🎃

Croxroad

23 Jan 2024 — 4 min read

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🔎 FTX's Massive Grayscale Bitcoin ETF Liquidation

There's been quite a shake-up in the crypto world recently. Investors pulled out more than $2 billion from the Grayscale Bitcoin Trust (GBTC) after it transformed into an exchange-traded fund (ETF) a few weeks back. FTX, a major player in the crypto scene, played a big part in this, selling off a whopping 22 million shares – that's almost a billion dollars' worth.

This whole thing is linked to the approval of new spot bitcoin ETFs by the U.S. Securities and Exchange Commission (SEC). Although the new ETFs by big names like BlackRock and Fidelity are gaining traction, the older Grayscale fund lost billions as people moved their money out.

FTX, in particular, took advantage of the price difference between Grayscale shares and the actual value of the bitcoin in the fund. They held a substantial amount of GBTC, valued at around $900 million when Grayscale's bitcoin ETF started trading in January. But here's the kicker – FTX's bankruptcy estate decided to sell off its entire GBTC holdings, bringing its ownership down to zero.

Now, some folks were hoping that the approval of these ETFs would boost bitcoin's price, but it actually went the other way. The silver lining here is that since FTX is done with its massive sell-off, the selling pressure might ease up a bit.

It's a bit of a rollercoaster in the crypto world, and everyone's watching how these moves will play out. FTX, Marex Capital Markets (formerly ED&F Man Capital Markets), and Galaxy Digital are all players in this story, and they're keeping pretty tight-lipped about it all. Oh, and there was a lawsuit against Grayscale for allegedly charging too much in fees, but that got dropped recently by Alameda Research, another firm connected to FTX.

🐳 Bitcoin's Battle at $41,000

Bitcoin is facing some choppy waters this Monday, struggling to stay afloat at $41,000 after taking a hit last week. Large-wallet investors, often referred to as whales, are making waves by closing leverage positions on Bitfinex and increasing their Tether (USDT) reserves. This intriguing dance of actions suggests that the current downward trend in Bitcoin's price might persist in the short term.

Crypto enthusiasts closely watch the moves of these big wallets on platforms like Bitfinex as it provides insights into the potential direction of Bitcoin's price in the near future. Data from CryptoQuant reveals that these whales have been closing leverage positions, causing a notable 21% decline in open interest – a crucial metric representing the total value of open derivatives contracts. A drop in open interest generally indicates low confidence among investors in the decline of BTC price.

Despite the ongoing buzz around Bitcoin ETFs attracting massive volumes, their impact on the spot prices of BTC is yet to materialize. Bitcoin's price has slipped nearly 2% in the past week and almost 7% over the last month. Analysts attribute this recent downturn to profit-taking by whales, suggesting a key driver behind Bitcoin's dip.

There's a noteworthy correlation between Bitfinex open interest and Bitcoin's price, making whale movements on this derivatives exchange particularly significant for BTC traders. The current rise in Tether exchange reserves, combined with decreasing open interest, could be signaling a bearish trend for Bitcoin. If this trend continues, a correction in Bitcoin's price may follow, triggered by derivatives traders closing leveraged positions.

Adding a bit of technical analysis to the mix, crypto analyst Mark Cullen predicts that Bitcoin's price might bounce back from the $41,000 level to surpass $44,000. However, he cautions that failure to bounce from this level could lead to a correction, possibly towards $39,080. It looks like the crypto market is in for an interesting ride in the coming days.

❌ What Happens When There Are No More Bitcoins Left?

In the year 2140, the common belief is that the last bitcoin will be mined. This assumption is based on the protocol's design, which halves the mining reward every 210,000 blocks. However, as the reward decreases, it will eventually reach a point where one satoshi becomes the reward. A satoshi is the smallest unit of bitcoin, representing 0.00000001 bitcoin, and it cannot be halved further.

This means that after a certain point, potentially post-2140, one satoshi may persist as the reward until the total supply of bitcoin reaches the capped limit of 21 million. In this scenario, there could be millions of satoshis rewarded, emphasizing the unique nature of the smallest bitcoin denomination that remains unaffected by the halving mechanism.