Bitcoin experienced a significant slump of over 4% on Friday, reflecting intensified selling pressure in the market. The cryptocurrency’s value plummeted from the $65,000 level to the $60,000 zone, coinciding with the completion of restructuring by the bankrupt crypto firm Genesis.
Genesis Global, a prominent digital assets lender, successfully finalized its bankruptcy reorganization, initiating the distribution of approximately $4 billion in crypto and cash to creditors. This substantial repayment includes distributions to creditors in Ether (ETH) and Solana (SOL).
Genesis announced the commencement of the repayment process, stating that the plan does not seek to cap recoveries at the petition date value. Creditors are expected to receive an average of 64% recoveries on an in-kind basis. Specifically, Bitcoin creditors will receive 51.28% recoveries, Ether creditors 65.87%, Solana creditors 29.58%, and altcoin creditors 87.65%. Additionally, creditors owed in US dollars and stablecoins are slated to receive 100% recoveries in USD. Further recoveries might be possible depending on the results of ongoing claims reconciliation.
The announcement also highlighted the establishment of a $70 million litigation fund, which comprises $26 million in Bitcoin, $13 million in Ether, and $31 million in USD. According to Arkham, Genesis moved 16.6k Bitcoin (worth approximately $1.1 billion) and 166.3K Ether (worth approximately $521.1 million) to creditors as repayments. Notably, billionaire investor Mark Cuban received $19.9 million in ETH from the Genesis bankruptcy settlement.
In the past week, Bitcoin’s price has tumbled by nearly 10%, dragging down the overall digital assets market. After hitting a high of $69,000 earlier in the week, Bitcoin fell to $60,000 on Saturday morning. The cryptocurrency faced further setbacks as Bitcoin spot ETFs recorded a total net outflow of $237 million on August 2. Specifically, the Fidelity BTC ETF (FBTC) experienced a single-day net outflow of $104 million, the Grayscale BTC ETF (GBTC) saw an outflow of $45.94 million, and the ARK 21Shares Bitcoin ETF (ARKB) reported an outflow of $87.68 million.
Despite these challenges, BlackRock’s IBIT ETF saw an inflow of $42.81 million, while Grayscale’s mini BTC ETF recorded a positive flow of $9.88 million. The total net assets of Bitcoin ETFs stand at $57.2 billion. As of the time of reporting, Bitcoin is trading at an average price of $61,639. It remains up by 45% on a year-to-date basis, with its 24-hour trading volume increasing by 17% to $44.7 billion.
The broader sell-off in Bitcoin and other digital assets can be attributed to various market dynamics, including slowing U.S. job growth, which has influenced investor sentiment and contributed to the current volatility. This week saw disappointing jobs and manufacturing reports, causing increased concerns about the health of the U.S. economy and the potential for a recession. These concerns have had a ripple effect across various markets, including cryptocurrencies.
Moreover, the distribution of assets from Genesis has added to the selling pressure, as large volumes of Bitcoin and Ether re-enter the market. The liquidation of these assets to fulfill creditor obligations has likely contributed to the downward pressure on prices.
As Bitcoin attempts to stabilize, market participants are closely monitoring these developments and their potential implications for the cryptocurrency’s future performance. The market remains in a state of flux, with investors weighing the impact of macroeconomic factors and the ongoing adjustments in the crypto sector. While Bitcoin has seen a significant correction, its long-term prospects continue to be a topic of keen interest and analysis among investors and analysts alike.