The last two weeks have been a nightmare for the entire crypto space as crypto investors were forced to liquidate their massive holdings in FUD after Sam Bankman-Fried’s FTX collapsed.
The FTX meltdown has raised concerns regarding Bitcoin-tied assets and ETFs as institutional investors continue to dump their positions.
Holdings of Grayscale’s Bitcoin Trust (GBTC) have been significantly liquidated amid the market turmoil, making a perfect opportunity for other crypto firms to buy the dip and push Bitcoin’s price upward.
The crypto market is embroiled in the recent bankruptcy filing by FTX as investors face less confidence in buying the dip, causing leading assets like Bitcoin to tumble near its bearish consolidated zone.
Digital Currency Group Boosts GBTC Purchase!
GBTC, which provides users with exposure to Bitcoin without any direct investment, has sharply fallen amid the FTX’s collapse. GBTC has made a record 43% discount (worth $10.57 billion) to the underlying asset Bitcoin’s price.
GBTC is significantly linked with BTC price as the world’s largest Bitcoin ETF controls 3% of the total Bitcoin circulation; hence, the fluctuation in GBTC’s price moves closely with Bitcoin’s price.
However, several investment firms see the downfall of GBTC amid the market crash as an excellent opportunity to bring a bullish wave to their portfolios by accumulating GBTC at a discounted rate.
In fact, Digital Currency Group (DCG), a crypto investment firm that is the parent company of Grayscale, rushes in a hurry to fill its bags with GBTC as its price experienced a sharp drop after a massive selloff by 3AC and BlockFi.
A prominent market analyst, Joe Consorti, said, “3AC dumped 100% of its bags. BlockFi dumped 100% of its bags. DCG is the largest holder of its subsidiary’s bitcoin trust.”
However, DCG is not the only one to enjoy the dip and take advantage of the lucrative discount to Net Asset Value (NAV) as Cathie Wood’s Ark Investment Management scooped up 588,586 more GBTC shares (~$5.4 million) as the CEO looks optimistic about its future price.
Joe further states that the main motive behind this extreme accumulation of GBTC is to minimize the impact of institutional-level selling pressure and accelerate its NAV to sell at a high price and exit the market at an overwhelming profit.
GBTC To Act As A Painkiller For Bitcoin
Nevertheless, the best strategy to overcome the current market situation and cover losses is accumulating more shares at a discounted price.
Moreover, a famous strategist, JPMorgan, outlined a deep correlation between GBTC and BTC as massive investment inflows in BTC’s ETFs have significantly pulled Bitcoin’s price from a bearish zone.
Simply put, investors’ interest in GBTC is a catalyst for Bitcoin’s bullish trend.
At the time of writing, Bitcoin trades at $16,649 with no sign of improvement in the price chart.
However, the recent GBTC purchases may build a slight buying pressure for BTC, pushing its price to the immediate resistance level of $17K.
The Balance of Power initiated a slight upward retracement to 0.23 but still trades in a negative region which signals an extended range-bound area.
However, the macro conditions are now improving, and it may facilitate BTC to pave its way to a bullish road soon.
To overcome its current bottom range, BTC needs to trade above $17K and break its Bollinger band’s upper limit at $18.5K.
However, things can change if GBTC fails to impact BTC price and a drop below the support region of $16K for BTC may lead to a sharp decline to $14.5K.