Grayscale is about to flush the market with 16,000 Bitcoin shares on July 19. This is the fund’s largest unlocking in a single day and is expected to spike volatility as well as create a bullish outlook for the market.
The Grayscale Bitcoin Trust(GBTC) is the world’s largest digital asset management company that holds the biggest reserve of the primary cryptocurrency among all financial institutions. At present, it has nearly $24 billion in assets under management(AUM).
Grayscale Bitcoin Shares Unlock Could Raise Price Volatility
GBTC operates in a periodic cycle, which means its shares aren’t available for purchase all year round. This year, the firm’s periodic closures have clashed with its buy-in value trading at a discount to the current price.
Investor funds are tied to GBTC for a fixed period and eventually released, allowing buyers to sell their investment at certain intervals depending on their price during purchase.
A negative GBTC premium relative to the spot in combination with a large unlock can raise the potential for volatility in July. The biggest unlock scheduled for the month will see markets flushed with 16,000 BTC shares equivalent to $627 million.
Selling Pressures to Stabilize Paving the Road for Market Bulls
Grayscale unlocking has attracted both buyers and sellers as BTC prices touch nearly $40,000. While fears regarding volatility persist, some are confident that the unlocking will stabilize and perhaps drive the selling pressures to zero. Loomdart, a popular crypto trader on Twitter, suggests that GBTC unlocking will help market bulls push against the existing resistance to take BTC prices upwards.
U guys realise we are already negating gbtc unlocks and after the bulk of them are over theres like… 0 spot btc sellers left right?
— loomdart (@loomdart) June 14, 2021
Interestingly, this projection is in striking contrast to the bearish outlook held by several investment institutions. With a decline in BTC demand from institutional investors, many analysts have painted a gloomy picture for the currency’s future.
The largest cryptocurrency is stumbling at the moment with daily price fluctuations. Last week, analytics firm CryptoQuant reported a decline in BTC’s open interest. The report coincided with a staggering drop in the overall Bitcoin transactions.