​Blogger Scott Melker predicts massive bitcoin sales if Grayscale collapses

What’s new? The Wolf of All Streets podcast host and crypto trader Scott Melker said in an interview with Kitco News that the collapse of digital asset management firm Grayscale Investments and the liquidation of its GBTC will trigger a domino effect across the market, causing massive bitcoin sales. He considers bankruptcy of the company unlikely, adding that if it occurs, firms such as Valkyrie Investments will be able to “take over” Grayscale and run it more efficiently. Meanwhile, Grayscale’s parent company, Digital Currency Group, suspended dividend payments to shareholders on January 18.

Kitco News interview

What else did Melker say? The expert expects the digital asset market to be dominated by sideways trading in 2023, and until the US Federal Reserve System (Fed) eases monetary policy, bitcoin will not “skyrocket.” Melker said a bull market would be seen coming towards the end of the year or in 2024 when the US presidential election is due to take place.

Melker said that a possible collapse of major crypto exchanges other than FTX will not affect digital assets in the long term. He said that after the market faced the collapse of the likes of Celsius, Voyager, BlockFi, Three Arrows Capital, and Terra, people were saying that in the event of another major collapse, “it’s over.” However, bitcoin is now trading above the price it was before the FTX collapse. “The asset class came back and continued to rise,” Melker said.

According to the crypto trader, when people start saying that an asset (any) is trending toward zero and start giving irrational reasons, it usually means it is time to buy.

“Now that we’ve seen these centralized platforms failing, like FTX, there has been a real movement back to the initial and original ethos of Bitcoin, which is […] the ethos of decentralization,” Melker summed up.

As of January 18, 16:15 UTC, BTC is trading at $20 856, having decreased by 1,11% in 24 hours, according to Binance.

What is known about Grayscale? The fund was founded in 2013. The company allows US-accredited investors to buy cryptocurrency investment products in a regulated environment through traditional market instruments.

In December, it became known that the liquidation of GBTC is seen as one of the options to solve the financial problems of Grayscale. The liquidity crisis of brokerage company Genesis had a negative impact on the crypto market and the parent company. According to analysts at Bernstein, there are only three options to save DCG: raise capital, sell non-strategic assets to save Grayscale, or liquidate GBTC. On January 9, the discount on GBTC shares decreased by 11,56%, amounting to -38,55% against par value.

In early January, it became known that Genesis owed creditors more than $3 billion. DCG may sell a $500 million venture capital portfolio to help a subsidiary. At the same time, DCG announced it was closing its $3,5 billion wealth management division.

For what Genesis’ liquidity crisis threatens the crypto market, read GetBlock Magazine’s article.