- A large swath of Grayscale Bitcoin Trust could hit secondary markets in July as six-month share lockups expire.
- JPMorgan anticipates the lockup expirations will cause downward pressure on bitcoin’s price.
- Other crypto experts say the hotly-anticipated lockup expiration may not create as much volatility as expected.
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A swath of shares in Grayscale Bitcoin Trust worth nearly 40,000 bitcoins will unlock in July in a hotly anticipated lockup expiration for the world’s largest bitcoin fund.
Due to the nature of the Grayscale Bitcoin Trust, institutional investors who buy the fund directly must hold the shares for six months before selling on the secondary market.
Many lockup periods are ending in July, and with 650,000 bitcoins in the trust, roughly 5% of the fund could be sold in the span of a few weeks. With Grayscale as the largest bitcoin fund, some investors may be worried a GBTC sell-off will exert downward pressure on GBTC and bitcoin prices more generally
July 17 is one of the largest days of the unlock period, with 16,240 bitcoin worth of GBTC becoming available to trade, according to Bybt.com.
Here’s 4 crypto experts on how the unlock will affect the bitcoin market.
Researchers from Kraken Intelligence noted that the lockup expiration could potentially provide upside pressure on GBTC prices and on bitcoin.
“Large institutions make up a sizable proportion of the GBTC owners who’ll have their shares unlocked this month. As most likely bought to profit from the Grayscale Premium – the once-hefty, and lucrative, disparity between the fund’s net asset value and spot price – they also likely shorted bitcoin in the spot and futures market so as not to be inadvertently impacted by price volatility,” the researchers said.
If institutions decide to unwind their positions, they will have to buy bitcoin from the spot market to cover the GBTC. This could potentially result in the unlocking giving a boost to bitcoin, Kraken said.
In June, JPMorgan noted that the GBTC share sale is a “headwind” for bitcoin.