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.
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.
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…