These Altcoins Are At Risk as Fear Of Grayscale’s Liquidation Gets Stronger

Published by

Sohrab Khawas

January 3, 2023

The Digital Currency Group (DCG) has come under scrutiny after Zhu Su, the founder of Three Arrows Capital, accused DCG and FTX of causing the decline of Terra (LUNA) and STETH and ignoring the issue instead of addressing it. In addition, Cameron Winklevoss, co-founder of Gemini, has written an open letter to DCG CEO Barry Silbert alleging that Genesis and its parent company, DCG, owe $900 million to Gemini customers.

It is known that DCG is the parent company of Grayscale, which is facing a decline following the collapse of FTX. This has caused concern in the crypto community that Grayscale may liquidate some of its trust funds to cover the debts of Genesis creditors, starting with low-performing altcoin trusts.

The Bitcoin Trust

According to the data, Grayscale holds approximately 8.5% of the total Ethereum Classic market capitalization. If Grayscale decides to liquidate ETC, there is a high probability that the value of the currency will significantly decrease.

In addition to ETC, Horizen ZEN and Zcash may also suffer significant losses, as Grayscale holds 4.6% and 2.5% of their market capitalizations, respectively.

However, the larger concern is the potential liquidation of Grayscale’s BTC trust, which holds approximately $10.5 billion BTC, or 3.3% of the total market capitalization. Similarly, Grayscale holds 3 million ETH, representing 2.5% of the total market capitalization.

As the situation may worsen, crypto investors and traders are hoping that the liquidation of these trusts can be avoided.

Sohrab Khawas

Sohrab is a passionate cryptocurrency news writer with over five years of experience covering the industry. He keeps a keen interest in blockchain technology and its potential to revolutionize finance. Whether he's trading or writing, Sohrab always keeps his finger on the pulse of the crypto world, using his expertise to deliver informative and engaging articles that educate and inspire. When he's not analyzing the markets, Sohrab indulges in his hobbies of graphic design, minimal design or listening to his favorite hip-hop tunes.