Hello and welcome to the latest Overbit Insights. The Grayscale BTC Investment trust is the subject of our first story of the week. As six-month share lockups expire in July, a significant portion of Grayscale Bitcoin Trust may become available on secondary markets. JPMorgan thinks that the lockup expirations will put negative pressure on the price of bitcoin.
Other cryptocurrency experts believe the widely-anticipated lockup expiration will not cause as much volatility as projected. A slice of Grayscale Bitcoin Trust shares worth over 40,000 bitcoins will become available in July, in a much-anticipated lockup expiration for the world's largest bitcoin fund. Because of the Grayscale Bitcoin Trust's nature, institutional investors that purchase the fund directly must hold the shares for six months before selling on the secondary market.
Given Grayscale's position as the largest bitcoin fund, some investors may be concerned that a GBTC sell-off will put downward pressure on GBTC and bitcoin prices in general. According to Bybt.com, July 17 is one of the busiest days of the unlock period, with 16,240 bitcoin worth of GBTC being available for trading.
On the contrary, Kraken Intelligence researchers stated that the lockup expiration might put upward pressure on GBTC and bitcoin prices. "Large institutions account for a large chunk of the GBTC investors whose shares will be unlocked this month."
If institutions opt to unwind their positions, they will need to purchase bitcoin on the spot market to cover the GBTC. According to Kraken, this might result in the unlocking, providing bitcoin with a boost. JPMorgan stated in June that the GBTC share sale represents a "headwind" for bitcoin.
"As a reminder to our readers, last December and last January had seen the highest monthly inflows into GBTC, of $2bn and $1.7bn, respectively, reflecting a significant extent GBTC premium.
To close out today's edition of Overbit Insights, we move over to Washington D.C., where it seems top lawmakers have their sights firmly set on the cryptocurrency market.
According to reports, one of America's most high-profile senators, Elizabeth Warren, has sent SEC Chairman Gary Gensler a letter regarding the cryptocurrency industry. Reports indicate that Warren has requested answers to five specific questions over its authority on the cryptocurrency industry and has until the end of July to respond.
This makes for a big deal for several reasons. The first, of course, is obvious: Elizabeth Warren's stature in Congress, especially when it comes to the financial sector. Warren presently chairs the Senate Banking Committee's Subcommittee on Economic Policy and is notorious for her prescient comments leading up to the 2008 financial crisis. On top of this, it certainly does not appear she is too thrilled with the current regulatory landscape in cryptocurrency.
More importantly, as one author notes, is how her letter seems to lend itself to Congress taking over regulations in cryptocurrency.
"Right now, most of the guidance on cryptocurrency has been issued from the SEC, the Commodities and Futures Trading Commission (CFTC), the Federal Trade Commission (FTC), and a series of other acronyms representing financial regulators."
According to reports, it seems that this current process has been in an effort to avoid stifling innovation in the cryptocurrency markets, noted by Tyrone Ross, CEO of Onramp Invest, which is a crypto-asset management tech solution for financial advisors. However, according to Ross," I think they're close to having some cohesive guidance," Ross says of the SEC and CFTC.
In the future, it's not precisely clear what Warren will do with the requested information. Congress has undoubtedly made moves on their own already, though; in April, a bill was passed (that is still awaiting approval) that will clarify laws and jurisdiction for cryptocurrency regulations. However, it certainly seems the United States may be coming to a decision point soon for cryptocurrency regulation, something we will do our best to keep you updated on here at Overbit. Thanks as always for reading.