Kraken casts doubt on bearish call on GBTC unlocks

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The Kraken cryptocurrency exchange has joined a growing chorus of analysts suggesting that a wave of new Grayscale Bitcoin Trust (GBTC) shares hitting secondary markets could be good for bitcoin prices.

The Grayscale Bitcoin Trust, the world’s largest digital asset fund, allows institutional investors to gain exposure to bitcoin through shares of the trust, which now holds 654,600 BTC. This represents around 3% of the total supply of cryptocurrencies. (Grayscale is a unit of Digital Currency Group, which also owns CoinDesk.)

Institutional investors can buy into the fund at its net asset value essentially, the value of the underlying bitcoin, but they are subject to a six month lock-in period. Because so many investors bought the trust earlier this year, many of those lock-ups are now expiring, meaning more GBTC holders will soon be able to sell their shares in the secondary market.

A widely cited report from JPMorgan suggested that the “unlocking” of GBTC could put downward pressure on GBTC prices and bitcoin markets in general. But analysts and cryptocurrency investors, including Amber Group and Arca Funds, have suggested that GBTC unlocks may actually be good for bitcoin prices.

According to a report by Kraken Intelligence, recent data indicates that nearly 40,000 BTC of GBTC shares will be released in July. That’s roughly $ 1.36 billion, based on a bitcoin price of $ 34,000.

Despite the unlocking of GBTC shares worth 40,000 BTC in July, the market structure suggests that the unlock will not weigh on the BTC spot markets any time soon, if at all, as some have claimed. , Kraken Intelligence wrote in the report.

According to regulatory documents, most of the shares that will be released in July belong to large institutions. Kraken said these large institutions presumably bought GBTC shares along with BTC to reap the premium over the net asset value (NAV) at which the shares were trading.

Whether these GBTC buyers are market participants who hedge their purchase by selling BTC or are new natural buyers, this will likely determine what impact, if any, the sale of GBTC shares could have on the cryptocurrency, a writes Kraken.

In a note last month, JPMorgan strategists, led by Nikolaos Panigirtzoglou, wrote that unlocking GBTC shares posed a downside risk to bitcoin.

The sale of GBTC shares coming out of the six-month lock-in period in June and July appeared to be additional headwinds for bitcoin, the strategists wrote.

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