The bankrupt crypto lender Genesis has filed a request with a US judge for permission to sell an astonishing $1.6 billion in crypto assets.
Market participants anticipate how Bitcoin’s price might respond if Genesis receives authorization for the sell-off.
Genesis to Sell $1.60 Billion in Crypto
According to the court filing, the proposed sale includes significant holdings in Bitcoin (BTC), Ethereum (ETH), and Ethereum Classic (ETC). These assets are currently held in Grayscale’s Trust products.
This move follows FTX’s liquidation of over $1 billion in GBTC holdings, which led to a sharp decline in Bitcoin prices.
Genesis holds most of its assets, nearly $1.40 billion, in the Grayscale Bitcoin Trust (GBTC), now a spot Bitcoin exchange-traded fund (ETF). The rest are in Grayscale Ethereum Trust and Grayscale Ethereum Classic Trust, worth $169 million and $38 million, respectively. The crypto lender plans to liquidate these assets to support in-kind distributions to creditors.
“Because the Debtors intend to make in-kind distributions to creditors to the maximum extent possible (and to make cash distributions where in-kind distributions are not possible), having flexibility to monetize the Trust Assets and to convert such amounts to the underlying asset will be more efficient and economically beneficial to the Debtors and their estates,” the court filing reads.
Genesis is closely linked with the larger Digital Currency Group (DCG) network, including Grayscale. Interestingly, after a tough year for the crypto sector in 2022, this connection faced scrutiny.
The downfall of major players in 2022 resulted in heavy losses for Genesis, leading to its bankruptcy. The situation has also severely affected Gemini, its biggest creditor. In fact, over 100,000 users of the Gemini Earn program have felt the repercussions.
Bitcoin Price Impact Amid Sell-Off
The potential market implications of this massive Bitcoin sale are profound. Analysts are closely monitoring Bitcoin’s price movements. Still, from a technical perspective, a possible inverse head and shoulders pattern has formed on the daily chart, with the neckline situated approximately at $43,500.
This pattern, often seen as a bullish indicator, suggests a potential price surge of 13.5% if accompanied by a breakout with substantial trading volume. Yet, the $49,000 level is expected to serve as a formidable resistance zone for Bitcoin.
Read more: Bitcoin Price Prediction 2024/2025/2030
It is worth noting that if the spike in selling pressure coming from Genesis impedes Bitcoin from surpassing the $43,500 neckline, the bullish would be invalidated. Such a scenario could trigger a price correction instead, toward $40,000.