Arcane Research, in a new report, has highlighted that investors should watch out for Digital Currency Group (DCG)’s protracted financial woes because they could have a negative impact on the cryptocurrency market.

Analysts and investors raised a critical concern following the disclosure of the Genesis problems: what would happen to Grayscale, a DCG subsidiary that owns a substantial amount of Bitcoin. No doubt most market participants heard about the problems DCG had after the collapse of FTX and many other companies.

The investigation emphasized that if DCG files for bankruptcy, it will be forced to liquidate its assets. Following this, it will force DCG to sell its sizeable positions in GBTC and unknown positions in ETHE and other grayscale trusts.

“Currently, GBTC is trading at 45% off its NAV, while ETHE is trading at 59% off its NAV. GBTC owns 3.3% of the circulating BTC supply and 2.5% of the ETH supply. A Reg M would trigger a massive arbitrage strategy of selling spot crypto instead of buying Grayscale Trust shares. If this scenario plays out, crypto markets could face further disadvantage.”

Arcane Research also highlighted the open letter written by Cameron Winklevoss to DCG CEO Barry Silbert, accusing Barry of acting in bad faith and using delaying tactics. At the end of the letter, Cameron asked Barry to publicly promise to help and resolve the issue by January 8. Meanwhile, Gemini’s intended course was not stated in the letter, but if Barry doesn’t respond, things could progress all the way. coordination of an involuntary request of DCG Chapter 11.

“In addition, on December 28, investment adviser Valkyrie submitted a proposal to become GBTC’s new sponsor and manager and also announced the launch of an opportunistic fund seeking to take advantage of GBTC discounts.”

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