Grayscale liquidation could have a huge impact on these altcoins

This week, all eyes are on Grayscale and the Digital Currency Group (DCG). In a worst-case scenario, the world’s largest crypto fund provider could liquidate some of its altcoin trusts.

A possible liquidation of the Grayscale altcoin trust could affect the prices of the already battered crypto asset. DCG is the parent company of Grayscale and has been heavily involved in the FTX collapse transition.

Cameron Winklevoss, co-founder of Gemini, on January 2. lashed out at the CEO of DCG Barry Silbert on frozen funds. The twin exchanges lent user funds to Silbert’s troubled Genesis brokerage. Genesis halted withdrawals following a lack of liquidity following the FTX implosion.

Fears have now emerged that Grayscale may have to liquidate some of its trust funds to cover originating creditors, The firm may start with underperforming altcoin trusts.

grayscale eth

Altcoin Trust Is Under Pressure

In addition to its flagship BTC Trust Fund (GBTC), Grayscale also offers several altcoin funds. Not included EthereumIt has single asset funds for the following altcoins: basic attention token (bat), bitcoin cash (BCH), chain link ,Contact, decenterland ,Mind, ethereum classic (Etcetera), Litecoin ,LTC, solana ,Fifth note of musical scale, stellar lumen (xlm), and zcash (ZEC).

In addition, there are some obscure funds, such as Filecoin (Phil, Horizon (Jane), and LivePeer (LPT).

Analysts have listed the altcoins that will be affected the most. These are listed in order of Grayscale holdings as a percentage of the coin’s market capitalization.

According to those figures, Grayscale holds about 8.5% of the entire Ethereum Classic market cap. It could be catastrophic for ETC should they end this trust. ETC price is already in major pain, trading at $16, down 90% from its all-time high today.

The Horizen ZEN token is also in the danger zone, accounting for 4.6% of Grayscale’s total cap. ZEN is currently down over 94% from its peak price, changing hands for $9.26 today.

Zcash may also face 2.5% of its market cap being locked up in the Grayscale Trust. ZEC is down 98.8% from its ATH, trading at just under $40 today.

Grayscale effect on BTC and ETH

However, the great fear is Liquidation Of Its Massive BTC Trust, Grayscale controls about $10.5 billion in BTC, which is about 3.3% of the total market cap. Over 630,000 BTC flooding the market will almost certainly send the price down to a new all-time low.

Ethereum will be in similar trouble as Grayscale holds 3 million ETH, or about 2.5% of its market cap. Crypto investors and executives around the world are praying that this scenario doesn’t end up being the deadline for action from Silbert’s vision.

disclaimer

BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.


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