Grayscale Trust is Unlocking Over 16,000 Bitcoins worth of GBTC!

As we come closer to July 18th, the curiosity surrounding Grayscale Trust’s scheduled Bitcoin unlocking, has gradually become grater. How will unlocking more than 16,000 Bitcoin worth of Greyscale Bitcoin Trust (GBTC) effect the price of Bitcoin? Even the leading market experts have varying opinions regarding whether Bitcoin’s price will move in a bullish or bearish direction. There are also plenty of investors who believe the price of Bitcoin will not see any dramatic changes one way or the other.

Why the Unlocking Could Create Bullish Price Action A sizeable amount of Grayscale Bitcoin Trust GBTC is owned by large investment institutions. During the last two unlocking periods of GBTC, a sizeable number of large institutions purchased GBTC, in order to harvest the GBTC premium, in what’s known as a market-neutral trading strategy. These investment institutions and traders shorted GBTC in the futures and spot markets In order to not be heavily impacted by the volatility of the market. If some companies decide to completely unwind their GBTC investments, they may need to purchase Bitcoin back from the spot market, to cover the GBTC. In this way, it is possible for the price of Bitcoin to see some demand enter the market, because of Grayscales unlocking period.

Why the Unlocking Could Create Bearish Price Action It is also possible that the unlocking of GBTC might cause some initial panic amongst less experienced investors. Inevitably, some investment institutions and traders will sell off their shares, which will slower the price of GBTC and Bitcoin. This may incite some fear within the Bitcoin community, and cause less-informed traders – who are on particularly high-alert for negative market catalysts – to sell their Bitcoin and GBTC; thus resulting in Bitcoin seeing an overall reduction in value.

In Conclusion There are important factors that need to be considered, regardless of the outcome of the GBTC unlocking. First, anyone who is unwinding their positions, may not do it right away, so an immediate drop in price is unlikely. Second, Bitcoin along with the rest of cryptocurrency, is growing larger every market cycle. The amount of price interaction from events like this unlocking will not interfere with savvy traders who are utilizing expert advice and going for the long haul!

Best of luck my friends!

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