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Genesis Acquires Over 32,000 BTC After Offloading GBTC Shares

Embattled crypto lender Genesis Global Capital has continued to ramp up efforts to pay up creditors after filing for bankruptcy protection in January 2023. As part of these efforts, Genesis has now reportedly sold off the entirety of its Grayscale GBTC holdings to acquire a substantial amount of Bitcoin in order to implement its repayment strategy. 

Genesis Converts GBTC Shares To Bitcoin In Preparation For Debt Settlement

According to a Friday report by Bloomberg Law, Genesis finalized the sale of its 36 million GBTC shares, as revealed by the company’s lawyers in a court filing on April 2. Genesis had initially received legal approval to liquidate its GBTC holdings on February 2 with each unit share valued at $38.50. However, court documents showed that the current price of GBTC as at the time of sale on April 2 was $58.50 resulting in a total sale price of $2.1 billion. 

Bloomberg’s report disclosed that the bankrupt crypto lender then used these proceeds to purchase 32,041 Bitcoin at a market price of $65,685, which will be distributed to creditors as part of its repayment plan, especially those who were previously enrolled in the Gemini Earn program. 

These recent transactions align with Genesis’s bankruptcy plan which allows the conversion of GBTC shares to either Bitcoin or direct cash for the settlement of its existing debt. Currently, the crypto lender owes $3.5 billion to creditors and will commence repayment following court approval. 

However, Genesis faces fierce opposition from its parent company, Digital Currency Group (DCG), over its proposed repayment plan. In a petition filed in February, DCG argues that its bankrupt subsidiary looks to settle creditors’ claims at amounts higher than their respective entitlement. 

DCG believes such a repayment strategy violates the Bankruptcy Code and is “unfair” since it will only benefit senior creditors who will largely gain from an appreciation in Genesis’s crypto assets value while equity holders and company stakeholders are left in unfavorable positions.

Founded in 2013, Genesis is one of the prominent crypto firms to file for bankruptcy. Its insolvency is largely linked to the sudden collapse of the defunct crypto exchange FTX.

Bitcoin Price Overview

In other news, Bitcoin gained by 2.55% in the last day to reach a price of $69,339. Such price gain would be encouraging to investors especially following the token’s overall negative performance in the past week. On higher timeframes, BTC largely remains largely bullish as anticipation continues to build ahead of the halving event on April 19.  The fourth halving in Bitcoin’s history is expected to reduce the mining reward from 6.25 BTC to 3.125 BTC.

GenesisBTC trading at $69,314 on the daily chart | Source: BTCUSDT chart on Tradingview.com

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Bitcoin Open Interest Surges To A 2-Year High, BTC Breaks Above $51,000

Bitcoin’s open interest has surged past $11 billion for the first time in over two years. This uptick comes when the world’s most valuable coin surges, recently easing past $51,000, the highest level since December 2021. 

Bitcoin open interest | Source: Kaiko on X

Surging Open Interest And Order Book Imbalance

According to Kaiko, a leading crypto analytics provider, this upswing in open interest comes at a critical time for the coin. When prices zoomed past $48,000 on February 11, there was an order book imbalance. Then, Kaiko observed there were $100 million more bids than asks. 

BTC ask-bid imbalance | Source: Kaiko on X

Technically, whenever there is an order book imbalance with more bids than asks, it suggests that buyers are more willing and enthusiastic to purchase at spot rates than sellers are willing to liquidate. Following this imbalance, prices shot higher the following days, breaking above the $50,000 psychological number to over $51,500 when writing on February 14. 

Surging open interest, especially as the market trends higher, is bullish. It means that more people are willing to participate in the market, hopeful of riding the trend. Subsequently, their participation translates to a more liquid market, charging the upside momentum.

Bitcoin is racing higher at the back of strong inflows into spot Bitcoin exchange-traded funds (ETFs). Over the past few weeks, spot Bitcoin ETF issuers have been rapidly accumulating the coin. The largest so far is BlackRock’s IBIT, owning over 70,000 BTC.

As a result, prices are edging higher, reflecting the high demand pinned directly to institutional participation. This positive sentiment and expectations of even more price gains, translating to higher open interest, is despite the continued liquidation of the Grayscale Bitcoin Trust (GBTC). Following court approval, GBTC is converted into an ETF, joining others like Fidelity, who also offer a similar product.

Genesis Looking To Sell GBTC; Will Bitcoin Rally In March?

Even with the high optimism, a potential cloud hangs over the Bitcoin market. Genesis, a crypto lender under bankruptcy protection, wants the court to allow them to sell over $1.4 billion of GBTC.

If the court green-lights this move, BTC could have more liquidation pressure, possibly unwinding recent gains. So far, the FTX estate sold their GBTC, estimated to be worth over $1 billion, coinciding with Bitcoin dropping to as low as $39,500 in January.

Bitcoin price trending upward on the daily chart | Source: BTCUSDT on Binance, TradingView

Besides these Bitcoin-specific events, the market is closely watching how the monetary policy scene in the United States will evolve in the next few weeks. The United States Federal Reserve is expected to slash rates in March, a potentially beneficial move for BTC.