Grayscale mulls selling for $2 billion of GBTC, Bitcoin price sell-off on horizon?

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Grayscale plans to offer up to 20% of the company’s outstanding shares if plans for a BTC ETF flop. Grayscale Bitcoin Trust continues to trade at a huge discount amid a seemingly endless crypto winter. Bitcoin price is holding below $17,000 after being rejected at $18,400 last week.

According to reports, Grayscale Investment, the world’s largest digital investment firm, has informed its investors that it is exploring options regarding the Grayscale Bitcoin Trust (GBTC) if plans to convert it into an exchange-traded fund (ETF). ) Bitcoin did not materialize.

Grayscale could liquidate 20% of GBTC

According to a report by the Wall Street Journal (WSJ), Grayscale CEO Michael Sonnenshein, options being considered include offering up to 20% of the fund’s outstanding shares, or approximately $2.08 billion in the GBTC Trust.

Shareholders could receive a tender offer asking them to sell or tender their shares at a predetermined price when the time comes. The Grayscale Bitcoin Trust (GBTC) is the world’s largest BTC investment vehicle, popularly known by its ticker symbol GBTC.

GBTC is designed to trade at a premium or discount to the market price of Bitcoin. Due to the crypto winter 2022, GBTC traded at a huge discount rate.

The trust traded at a 49% discount on Friday to the price of Bitcoin. At this time, Grayscale only allows the creation of GBTC shares, with share buybacks prohibited.

What is the fate of Grayscale’s Bitcoin ETF plans?

Sonnenshein worries that the recent FTX debacle could be a reason for the Securities and Exchange Commission (SEC) to put the brakes on a bitcoin exchange-traded fund (ETF). The collapse of FTX has, since early November, spread contagion across the industry, leaving companies like BlockFi with no viable option but to file for bankruptcy.

The SEC has repeatedly rejected proposals to have a spot ETF. The regulator only allows ETFs that monitor Bitcoin futures price movements. Although Grayscale has not yet set a timetable for converting its GBTC into an ETF, the CEO believes that all options should be considered well in time.

The CEO indicated in the offer letter that his GBTC would continue to operate. Nonetheless, the company will continue to explore ways to proceed with the ETF conversion or continue with the tender offer.

“We are more determined than ever to convert GBTC into an ETF. That’s what we’re putting all of the company’s resources behind,” Grayscale CEO Sonnenshein said in the interview with WSJ.

Bitcoin price prediction as Grayscale considers options for its GBTC

Bitcoin price has yet to regain the ground it lost since the middle of last week when it surged to $18,400. The support at $16,000 was important to ensure the declines did not extend further. BTC soars to $16,718 amid a directionless battle between bulls and bears.

BTC/USD eight-hour chart

The Moving Average Convergence Divergence (MACD) reinforced last week’s sell signal by sliding below the average line (0.00). As long as the MACD (line in blue) remains below the signal line (in red), the path with the least resistance will be on the downside.

A daily close below support at $16,000 could leave Bitcoin price in danger of falling to $15,800. If the surge materializes, Bitcoin price could drop to $12,000, which some analysts consider the ultimate bottom.

On the upside, a rally above major moving averages like the 50-day exponential moving average (in red), the 100-day EMA (in blue) and the 200-day EMA (in purple) can invalidate the bearish outlook and support Bitcoin’s uptrend resumption above $20,000.

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