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Breaking News: LINK Price Climbs Following Chainlink's Deal With US Commerce Department, Eyes $30

Will Bitcoin Price Fall If Genesis Files For Bankruptcy? Here’s What We Know

Jake Simmons
Jake Simmons
1 year ago
3 mins read
Bitcoin price

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After the DXY fell intra-day to a new 7-month low of 101.56 yesterday, the Bitcoin price briefly managed to tackle the key resistance zone above the $21,500 mark, reaching its highest level since September 13, 2022, at $21,650. However, the euphoria did not last long for two reasons.

First, the DXY showed a strong bounce, and second, news became public that Genesis Trading could be preparing for bankruptcy. This has stoked new fears that the contagion in the crypto market could roll on after the FTX bankruptcy in November. But what is known so far and what could this mean for the Bitcoin price?

Here’s What’s Known

According to a Bloomberg report yesterday, Genesis Trading, a subsidiary of crypto mogul Barry Silbert’s DCG empire, is facing bankruptcy. If the report proves true, the bankruptcy filing could come as early as this week, according to Bloomberg.

Faced with a lack of liquidity, Genesis is currently in confidential negotiations with various creditor groups. Genesis and DCG have reportedly exchanged several proposals with creditors, but have so far failed to reach an agreement.

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Genesis is working on a restructuring plan, according to informed sources. Some creditors apparently would be willing to accept a mix of cash and share certificates from DCG.

However, the deal may not be ready yet, as Bloomberg reported yesterday. According to crypto author Samuel Andrew, citing sources close to DCG, talks are continuing and plans could still change. Andrew wrote today:

UPDATE: The Genesis Trading news regarding a ‘pre-packaged bankruptcy’ is being refuted by several Genesis creditors that matter. **several sources claim that DCG/Genesis is leaking the pre-packaged bankruptcy narrative to force an agreement. Quote, ‘…far from a done deal.’

What Impact Will It Have On The Bitcoin Price?

The impact of a Genesis bankruptcy on the Bitcoin price will likely depend largely on whether DCG will find a deal with Genesis’ creditors or whether DCG will be dragged into bankruptcy with them.

Although details are not yet available, it seems likely that a “pre-packaged” deal could prevent a major market impact on Bitcoin price by preventing DCG’s insolvency and liquidation of Grayscale.

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If there’s no deal, this could arguably result in the “cash cow” Grayscale having to be sold or DCG being forced to liquidate large chunks of its Grayscale Bitcoin Trust (GBTC) holdings. This is due to the fact that DCG owns Genesis money.  The loans are $575 million due in 2023 and another $1.1 billion promissory note due in 2032 to Genesis.

However, there are several factors still unclear. Thus, it’s still not clear if a Genesis bankruptcy will automatically result in DCG going down, depending on the question of if they can raise enough funds. Also, the liquidation of GBTC isn’t an easy task as it comes with high legal hurdles and requires the SEC’s approval.

Accordingly, crypto influencer Lark Davis also commented via Twitter, “No indication yet on how this will affect DCG or the Grayscale Bitcoin and Ethereum Trusts.”

Hypothetically speaking, a liquidation of the entire GBTC could mean a massive dump if more than 630,000 BTC were flushed into the still illiquid market. Even if the liquidation were to take place over a period of several months, such selling pressure would likely drive the Bitcoin price significantly down.

At press time, the Bitcoin price remained relatively stable despite the rumors and stood at $20,802.

Bitcoin price BTC USD
Bitcoin price rejected at key resistance | Source: BTCUSD on TradingView.com

Featured image from Behnam Norouzi / Unsplash, Chart from TradingView.com

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Jake Simmons
Jake Simmons

Jake Simmons

Jake Simmons, a dedicated crypto journalist, has been passionate about Bitcoin since 2016 when he first learned about it. Through his extensive work with NewsBTC.com and Bitcoinist.com, Jake has become a trusted voice in the crypto community, guiding newcomers and seasoned enthusiasts alike towards a deeper understanding of this dynamic field.

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His mission is simple yet profound: to demystify Bitcoin and cryptocurrencies and make them accessible to everyone.
With a professional career in the Bitcoin and crypto scene that began right after graduating with a degree in Information Systems in 2017, Jake has immersed himself in the industry. Jake joined the NewsBTC Group in late 2022. His educational background provides him with the technical prowess and analytical skills necessary to dissect complex topics and present them in an understandable format. Whether you are a casual reader curious about Bitcoin or an investor seeking to navigate the latest market trends, Jake’s insights offer valuable perspectives that bridge the gap between complex technology and everyday usage.

Jake is not just a reporter on technological trends; he is a firm believer in the transformative potential of Bitcoin over traditional fiat currencies. To him, the current financial system is on the brink of chaos, propelled by unchecked government actions and flawed Keynesian economic policies. Drawing from the principles of the Austrian school of economics, Jake views Bitcoin not merely as a digital asset but as a crucial step towards rectifying a failing monetary system. His libertarian views reinforce his stance that just as the church was separated from the state, so too should money be freed from governmental control.

For Jake, Bitcoin represents more than just an investment; it's a peaceful revolution. He envisions a future where Bitcoin fosters a sustainable and responsible financial framework for generations to come. His advocacy is not about opposition but about evolution, about laying the groundwork for a system that prioritizes transparency and equity over secrecy and inequality.

As a journalist, Jake’s articles are crafted with the precision of a scholar and the passion of a true believer. He provides not only news but also thoughtful analysis that connects the dots between daily developments and larger economic theories. His work is a beacon for those lost in the technical jargon often associated with crypto discussions, illuminating the practical implications and benefits of these technologies.

In summary, Jake Simmons is not just reporting on a revolution; he wants to be part of it, fully committed to enhancing public understanding and adoption of Bitcoin and cryptocurrencies. His work is more than just a collection of articles; it’s a resource, a guide, and a companion for anyone ready to explore the potential of this digital frontier. Whether you are taking your first steps into crypto or are a veteran looking to stay on top of the latest trends, Jake’s insights provide clarity and foresight in an often unpredictable industry. Join him on this journey to reshape the world of finance, one post at a time.

You can engage with his latest takes on Twitter: @realJakeSimmons.

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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