Impending $1.4 Billion GBTC Sale

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Good Morning.

Crypto is getting exciting again. Jupiter token launched injected $700M in liquidity to Solana DeFi, Chainlink rallied (are oracles as investment theses back?), Ronin dumped post its Binance listing, and Farcaster is becoming popular thanks to Frames.

Follow me on Farcaster!

In Today's Email:

• What Matters: $1.4B GBTC sale 💸 

• Products: Clusters name service 👛

• Charts: BTC ETFs flow, $450B opportunities 📈

TOGETHER WITH

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WHAT MATTERS

Genesis Seeks Approval for $1.4B GBTC Sale

State of play: Genesis Global Capital, a bankrupt crypto lender, has filed a motion to sell ~$1.6B in trust assets with the US Bankruptcy Court in the Southern District of New York.

• Genesis also filed another motion to shorten deadlines, aiming for the sale motion to be addressed at the court's upcoming hearing on February 8.

• The GBTC shares, serving as initial collateral for Gemini's Earn program from Genesis and acquired from Three Arrows Capital's bankruptcy, are the subject of the transaction.

• Genesis is pursuing to claim of ~31M shares (valued at ~$1.2B) pledged to Gemini but not transferred, with their ownership status currently unresolved in court.

According to the filing, the $1.6B assets include:

• ~$1.4B of Grayscale Bitcoin Trust.

• ~$170M of Grayscale Ethereum Trust.

• ~$38M of Grayscale Ethereum Trust Classic.

What’s next: If approved, Genesis will probably sell their assets ASAP.

Our take: It’s one of the best times to sell BTC for bankruptcy purposes.

• This is because of the recently approved spot Bitcoin ETFs (improved liquidity) and the upcoming halving narrative that might contribute positively to BTC price.

For builders and investors: Slowly but surely, we’re getting the closure that we need from all the negative crypto events in 2022. Just a bit more.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

PRODUCTS OF THE WEEK

Clusters, a Cross-Chain Wallet Naming Protocol

Delegate Labs introduced Clusters, a cross-chain, multi-wallet name service designed to address the fragmentation problems in crypto transactions across diverse networks.

• On the same day as the launch, Delegate Labs also closed a $9M seed round, with investments from Electric Capital, Arca, Variant, and Arrington Capital, among others.

• Delegate Labs introduced its Delegate protocol in 2022 to safeguard on-chain assets by connecting cold (offline storage) and hot wallets.

• Since its debut, the Delegate protocol has linked over 180,000 wallets, holding assets valued at $900M, as per a company statement.

Other cool products:

• Nebulox, a crypto payment solution.

• Nexandria, a premium block explorer.

• Tegro.Finance, DeFi exchange on TON.

• Pools Wallet, an all-in-one decentralized wallet.

• Kima, a decentralized, blockchain-based money transfer protocol.

CHARTS OF THE WEEK

Bitcoin ETFs Flows Hit $1.58B

Credit to OurNetwork for the original report.

State of play: Since the approval of spot bitcoin ETFs on January 10, the inflows and outflows of spot bitcoin ETFs have reached $1.58B as per @hildobby’s Dune dashboard.

• Those ETFs account for $28B in BTC, representing 3.31% of the current supply of BTC.

• The most significant outflows have been from Grayscale's GBTC.

• Despite the outflows, GBTC maintains dominance with over 70% market share, amounting to more than $20B.

• Blackrock and Fidelity's ETFs each hold nearly 10% market share with $2.7B in assets under management.

• BTC holdings in Grayscale's GBTC have fallen over 20% since its ETF conversion, totaling a loss of ~129,000 BTC.

Our take: The spot Bitcoin ETFs market has relatively stabilized, with Grayscale’s infamous GBTC discount evaporating fast.

Smart Contract $450B Opportunities

Credit to Ark Invest for the original report.

State of play: If the majority of financial assets shift to blockchain at a pace akin to internet adoption, and DeFi fees are a third of traditional services, smart contracts could yield over $450B (78% increase) in annual fees by 2030.

• This could also create over $5T market value by 2030, growing at annual rates of 32%.

• In 2023, the gross smart contract fee revenue was $8B.

• In 2023, the smart contract protocol market value was at $775B.

Our take: Crypto’s use case to improve financial infrastructures continues to be the biggest trend and opportunity, even amidst the push toward creating consumer apps.

QUICK BITES

• Trump calls CBDC and AI dangerous.

• Ryder Ripps must pay Yuga Labs $9M.

• Steve Christie returns to Binance as Deputy CCO.

• FTX seeks permission to sell an 8% stake in Anthropic.

• Genesis asks bankruptcy court to approve $1.4B in GBTC sale.

• South Korea proposes a vetting process for crypto executives.

• Nayib Bukele declares win for second term as El Salvador president

• Hong Kong urges crypto investors to check platform licensing status.

• Solana registers an all-time high in monthly new addresses for January.

NOTEWORTHY READS & MEME

• 0xSmac’s read on mailbag #1.

• Eva Beylin’s read on pomegranate theory.

• Polynya’s read on decentralized stack and global consensus.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.