DCG did not find investors, will Bitcoin and the entire crypto market implode?

DCG did not find investors, will Bitcoin and the entire crypto market implode?

  • Today is the last day for Digital Currency Group (DCG) to raise $1 billion in cash to protect Genesis from failure.
  • The crypto market fears that DCG may start selling its Bitcoin holdings to raise capital and Bitcoin is down 4 percent below $16,000.

Following the collapse of crypto exchange FTX earlier this month, recent developments have turned investors’ attention to Digital Currency Group (DCG) and Genesis Trading.

According to the latest report, DCG may be in a situation to liquidate its cash cow, Grayscale Bitcoin Trust (GBTC). There are many rumors about this in the market at the moment. But to understand this, let’s understand the connection between Digital Currency Group, Grayscale and Genesis Trading.

DCG is the parent company of some of the well-known crypto companies such as Genesis and Grayscale. In the entire crypto space, Genesis is the only full-service broker and a major company in DCG’s portfolio. Moreover, the company also plays a critical role in providing crypto access as well as risk management for large institutions.

However, the crypto winter of 2022 plays a major spoiler in the whole show. Genesis began to suffer with the collapse of crypto hedge fund Three Arrows Capital (3AC), but DCG somehow managed to save it.

Last week, Genesis also suspended payouts for its Genesis Earn program. The company urgently needs a cash infusion of $1 billion by today, November 21. If Genesis is unable to raise this amount, it may give a bad image to DCG which may have a ripple effect on grays as well.

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Will Grayscale Liquidate Its Bitcoin?

The rumor mill running in the market is that Grayscale Bitcoin Trust (GBTC) would start liquidating its BTC if Genesis does not get the necessary cash. As of now, GBTC has a total of 634,000 Bitcoins in its kitty. Andrew Parish, co-founder of ArchPublic raised doubts which says there are zero bids for Genesis’ $1 billion raise.

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Andrew’s tweet has already put the entire crypto space under selling pressure. Bitcoin (BTC) is down nearly 4 percent at the time of writing, trading below the $16,000 level. However, popular crypto analyst Dylan LeClair has urged investors to take Andrew’s tweet with a grain of salt.

“No idea if this guy is just making stuff up or not, but at this point absolutely nothing would surprise me. Take this guy’s sources with a grain of salt, but… Where there’s smoke, there’s often fire. Leverage kills – steady boys,” he wrote.

Another truth is that Grayscale Bitcoin Trust (GBTC) is trading at a historic low of 46 percent discount to NAV. That means the Bitcoin price of GBTC is trading at less than $10,000, and still not enough institutional interest in it.

However, aside from selling BTC from its holdings to the Grayscale Bitcoin Trust, DCG may also consider other options to raise $1 billion. This could include some of its other businesses, including Luno, Foundry and Coindesk. Grayscale and Genesis are certainly a bigger priority for DCG than other assets.

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