Cryptocurrency

Is Bitcoin at Risk of Losing $30,000?

For the past few weeks, analysts have been pondering whether a potential sale linked to a multi-billion dollar Bitcoin (BTC) mutual fund would lower the cryptocurrency’s spot price. The argument that experts draw attention to is related to the Grayscale Bitcoin Trust work, which allows institutional investors to invest in BTC.

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How will GBTC affect the price of Bitcoin (BTC)? Here are the opinions of analysts

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Investors buy GBTC shares directly through Grayscale with daily private placements, paying in Bitcoin or dollars. However, investors can sell their GBTC shares to other parties only after a six-month lock-in period in the secondary markets. Therefore, they expect to be liquidated at a premium when the market price of BTC at the time of sale rises above the value of the asset. The Grayscale premium has been at a discount since February 24, 2021. Therefore, if investors decide to dispose of their GBTC holdings, they will be at a loss.

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A number of analysts, including strategists at JPMorgan, believe that accredited investors will sell at least some of their GBTC holdings after the July unlock period, and therefore the downtrend in the BTC market will worsen. “Despite this week’s correction, we do not want to give up our negative outlook for BTC and crypto markets more generally,” Nikolas Panigirtzoglou, chief strategist at JPMorgan, wrote in a note to clients. Therefore, despite some developments, our signals are generally bearish.”

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Is the BTC price related to the unlock date of GBTCs?

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Panigirtzoglou announced that GBTC shares were bought by investors in December 2020 at a premium of approximately 40%. In December, inflows of 2 billion dollars and in January 1.7 billion dollars were seen. This means that by the end of July, the share will be unlocked at the cost of around 140,000 Bitcoins. From mid-April to mid-June, about 139,000 Bitcoins were released, coinciding with the same time that BTC fell from $65,000 to $28,800.

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As we mentioned before , Lyn Alden, the founder of Lyn Alden Investment Strategy, drew attention to the correlation between the collapse of the Bitcoin price and Grayscale’s GBTC unlock cycles, and stated that one-to-one things can happen with the unlocking of more shares in July.

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