Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 17.

franky1

legendary

Activity: 4424

Merit: 4794

Quote from: fillippone on January 06, 2023, 03:11:01 AM

Quote from: franky1 on January 04, 2023, 07:17:43 PM

however DCG doesnt want to pull the trigger now. they want to wait out as much as possible for the "discount" so that they dont have to pay out as much on the shares to unlock more of the asset

Mah I have lost you here.
their incentive, when doing this kind of operation is for the discount to go down, not up.
They are offering to buy back a share at NAV level, irrespective of the market price.
They are paying 1 Bitcoin for every 1 bitcoin amount of shares, currently trading at roughly 0.5 bitcoin.
So they are spending 1 bitcoin whatever the market price. If market price is closer to 1 bitcoin (discount decrease) their final Mark to Market is less negative.

Either I didn't interpret your post correctly or I didn't get the whole operation correctly.

their reason to do this is to use less money to get the coin

imagine december was 50% discount
it means they have to pay $5.3b to do a 100% buyback,
   meaning a 0.53b 10% buyback for 1.06b worth of coin release to them
   meaning a 1.06b 20% buyback for 2.12b worth of coin release to them

if they can wait out for more discount.. say 55% discount, instead of paying out 1.06 for 2.12 release
they would only pay $4.77b to do a 100% buyback,
   meaning a 0.477b 10% buyback for 1.06b worth of coin release to them
   meaning a 0.954b 20% buyback for 2.12b worth of coin release to them

thus a better deal for them
if discount went up to 55%
instead of paying 1.06 they pay out 0.954
saving THEM $106million by waiting for 5% more discount

fillippone

legendary

Activity: 2380

Merit: 17063

Fully fledged Merit Cycler - Golden Feather 22-23

Quote from: franky1 on January 04, 2023, 07:17:43 PM

however DCG doesnt want to pull the trigger now. they want to wait out as much as possible for the "discount" so that they dont have to pay out as much on the shares to unlock more of the asset

Mah I have lost you here.
their incentive, when doing this kind of operation is for the discount to go down, not up.
They are offering to buy back a share at NAV level, irrespective of the market price.
They are paying 1 Bitcoin for every 1 bitcoin amount of shares, currently trading at roughly 0.5 bitcoin.
So they are spending 1 bitcoin whatever the market price. If market price is closer to 1 bitcoin (discount decrease) their final Mark to Market is less negative.

Either I didn't interpret your post correctly or I didn't get the whole operation correctly.

franky1

legendary

Activity: 4424

Merit: 4794

this whole gemini ->genesis<->DCG<->greyscale
hop,skip, jump game of money shuffling to try paying one off with the other and hope to make some profit in the middle whilst exiting some customers at a loss.. is just ridiculous
along with the fir tree lawsuit of DCG-greyscale

it has caused the need for DCG to do a 20%($1b) buy back of shares to unlock $2b of assets
however DCG doesnt want to pull the trigger now. they want to wait out as much as possible for the "discount" so that they dont have to pay out as much on the shares to unlock more of the asset

you would have thought that after several years of running exchanges and financing stuff a venture firm like DCG will be streaming with 10's of billions of spare cash right now to handle any/all eventualities.. and yet they had to take out loans just to shuffle around their own debts and now have to do equity/collateral sell offs to then pay off loans

what would be worse is if DCG got coinbase to unlock $500m from GBTC stash first to then pay off 20% share holders. to then grab the other $1.5b that is then share unlocked.. as that is then a breach of the whole trust contract.. but i can see it happening which is why i feel coinbase is hesitant on showing coin reserve addresses publicly

Kryptowerk

legendary

Activity: 2114

Merit: 1403

Disobey.

Quote from: franky1 on January 02, 2023, 11:09:48 PM

in other news
the winklevi are getting very itchy feet trying to chase after DCG

https://twitter.com/cameron/status/1609913051427524608/photo/1
https://twitter.com/cameron/status/1609913051427524608/photo/2

Wow, this reads just like out of a movie script.
An open letter like this is truely a last resort to create public attention and further pressure.
Wonder how this will play out, but we usually know not well for the 300k-and some people affected.

franky1

legendary

Activity: 4424

Merit: 4794

in other news
the winklevi are getting very itchy feet trying to chase after DCG

https://twitter.com/cameron/status/1609913051427524608/photo/1
https://twitter.com/cameron/status/1609913051427524608/photo/2

franky1

legendary

Activity: 4424

Merit: 4794

Quote from: fillippone on January 02, 2023, 07:11:57 PM

Quote from: franky1 on January 02, 2023, 07:05:00 PM

never invest a "minimum $1m per investor" into a brand with no funding to even lease a proper office

I didn't know the backstory of Valkyrie. Nothing wrong about changing the firm mission (Hey, did you hear Microstrategy is now a bitcoin company?).
But I do agree on the background check when required for investing. Dear old due diligence.

yes but Micheal Saylor is a proper ceo, proper business, he is not offering a hedge fund. he is investing his own business funds into crypto for his own business future prospects. and they have a real headquarters

however valkerie reminds me(my spidey sense is tingling) of them ICO scams a few years back, "hiring" known finance guys to appear in their "executives" section of 'about us' pages. but having no physical HQ or any of the standard pre-requisites of a hedge fund

Charlie Burgoyne founder of valkerie is not a fund manager guy.

i dont want to re-hash my gripes with greyscale, dcg, blockstream stuff over the last 7 years.. but swapping greyscale for valkerie is a escaping the boiling water to be stepping into the fire, in my opinion

fillippone

legendary

Activity: 2380

Merit: 17063

Fully fledged Merit Cycler - Golden Feather 22-23

Quote from: franky1 on January 02, 2023, 07:05:00 PM

never invest a "minimum $1m per investor" into a brand with no funding to even lease a proper office

I didn't know the backstory of Valkyrie. Nothing wrong about changing the firm mission (Hey, did you hear Microstrategy is now a bitcoin company?).
But I do agree on the background check when required for investing. Dear old due diligence.

franky1

legendary

Activity: 4424

Merit: 4794

they were a AI and data science company just a couple years ago and now suddenly want to become a hedge fund... be very skeptical

yes they employed a few names that are known from other "finance" sectors(guggenheim) to appear legit. but if they cant even afford to lease a proper office and want to avoid showing their true location. stay far far away from them

never invest a "minimum $1m per investor" into a brand with no funding to even lease a proper office

fillippone

legendary

Activity: 2380

Merit: 17063

Fully fledged Merit Cycler - Golden Feather 22-23

Quote from: franky1 on January 02, 2023, 06:10:16 PM

the nasty thing is....
valkeries "business address" (320 seven springs way brentwood) is a virtual address(modern po box)

When I said I doubted the move would be successful, I didn't expect that.

Regarding the capital, we know how fast money cn be poured into a vehicle. But regarding the virtual address, yes, this is a bad sign. Even if an investment vehicle don't need too much of an office space, this is not reassuring at all.

franky1

legendary

Activity: 4424

Merit: 4794

Quote from: JayJuanGee on January 02, 2023, 12:26:49 PM

On a superficial level, I do not understand the math.

How could a company that ONLY manages $180 million be able to scoop up 50% of a fund that is $10.5 billion. It does not add up in my wee widdo pea-sized brain. Am I thinking too small in regards to how $180 million can be used in such a way?

valkerie is just a brand of a crypto business.. look beyond the brand and look at the people involved and the companies they are involved with

looking at their deal with seeking investors to get to a point of "buying out" 50%. we see some familiar names.. like using stonegate as the management team(administrators) which is involved in some of the blackrock, fidelity, DAG, stuff in the cryptoconomy

the nasty thing is....
valkeries "business address" (320 seven springs way brentwood) is a virtual address(modern po box)

if you are unable to find a real office address full of the physical supposed employee's to be able to physically slap them with a rotten fish if they do you wrong.. dont invest in them in the first place

i see this as another shell company 3 card shuffle of leaping out the boiling water and into a firepit

..
valkerie was a AI and data science company in 2019.. now suddenly being rebranded as a hedge fund.. operating via a virtual address with a rent-an-office..

yea be sceptical

JayJuanGee

legendary

Activity: 3920

Merit: 11299

Self-Custody is a right. Say no to"Non-custodial"

Quote from: fillippone on January 02, 2023, 07:56:18 AM

According to Bloomberg Valkyrie Investment is aiming to scoop up to 50% of GBTC shares, aiming at becoming the new GBTC sponsor:
Valkyrie Unveils Proposal for Grayscale’s Troubled Bitcoin Trust (GBTC)

Quote

(Bloomberg) -- Valkyrie Investments is out with a proposal for a much larger rival product: to become the new sponsor and manager of the crypto industry’s largest fund, the Grayscale Bitcoin trust.
The Nashville, Tennessee-based asset manager, which oversees roughly $180 million, on Friday announced the launch of the Valkyrie Opportunistic Fund, which seeks to take advantage of the massive discount in Grayscale Investments’ $10.5 billion product (GBTC). The Valkyrie fund will be increasing its holdings of GBTC, allowing the company to realize “the true value of the underlying Bitcoin for our investors,” which it says is a goal it will actively pursue on their behalf, according to the company.

I strongly doubt the move will be successful, but hopefully it will help closing the NAV discount as the is some sort of "soft commitment" by another "big swinging dick in the industry.

On a superficial level, I do not understand the math.

How could a company that ONLY manages $180 million be able to scoop up 50% of a fund that is $10.5 billion. It does not add up in my wee widdo pea-sized brain. Am I thinking too small in regards to how $180 million can be used in such a way?

franky1

legendary

Activity: 4424

Merit: 4794

they seem a little busy preparing the 20% redemption triggered by the fir tree law suit last month

it is kind of sad that GBTC want to charge 2% fee for just holding onto peoples value, when it turns out greyscale is not actually even holding the value. (coinbase is).. but then coinbase and greyscale not allowing people to escape..

greyscale have shoddy terms about "we wont redeem unless sponsor allows" (THEY ARE THE SPONSOR!!)
so other companies want to buy out greyscale to be the sponsor to the change the terms and allow redemptions

greyscale is hoping a 20% redemption for those that want to escape would be enough to appease those that want to leave

however i perceive a race to exit of everyone causing a bank run where greyscale can only afford a 20% exit and everyone fighting for a 'ticket' to be only of the 20% first class leavers

fillippone

legendary

Activity: 2380

Merit: 17063

Fully fledged Merit Cycler - Golden Feather 22-23

According to Bloomberg Valkyrie Investment is aiming to scoop up to 50% of GBTC shares, aiming at becoming the new GBTC sponsor:

Valkyrie Unveils Proposal for Grayscale’s Troubled Bitcoin Trust (GBTC)

Quote

(Bloomberg) -- Valkyrie Investments is out with a proposal for a much larger rival product: to become the new sponsor and manager of the crypto industry’s largest fund, the Grayscale Bitcoin trust.
The Nashville, Tennessee-based asset manager, which oversees roughly $180 million, on Friday announced the launch of the Valkyrie Opportunistic Fund, which seeks to take advantage of the massive discount in Grayscale Investments’ $10.5 billion product (GBTC). The Valkyrie fund will be increasing its holdings of GBTC, allowing the company to realize “the true value of the underlying Bitcoin for our investors,” which it says is a goal it will actively pursue on their behalf, according to the company.

I strongly doubt the move will be successful, but hopefully it will help closing the NAV discount as the is some sort of "soft commitment" by another "big swinging dick in the industry.

franky1

legendary

Activity: 4424

Merit: 4794

Quote from: Daltonik on December 19, 2022, 11:59:44 AM

I received a New Year's newsletter from Grayscale by email,
https://grayscale.com/end-of-year-ceo-letter-to-investors-2022/

greyscale CEO speaks on video
https://www.youtube.com/watch?v=D3hI0p-_x2c

Quote

i reject the premiss that its hard to get audited financials done

https://www.youtube.com/watch?v=gdj5RWmQjnQ

well

Quote

the custodian cannot disclose such public keys to the sponsor, trust or any other individual or legal entity," page 94 section "Security of the Account" https://www.sec.gov/Archives/edgar/data/1588489/000119312517013693/d157414ds1.htm

"cannot disclose PUBLIC keys"
i call that a paradox of words

hey greyscale. coin base have the keys..
hey greyscale. not-your-keys-not-your-coin

by the way

of the $10b of assets. they have $5b of shares(50% discount)
if they fail to get acceptance to offer a ETF by spring, they can only afford to buy back 20% of shares
so they only have $1b of cashflow to buy out share holders that would want to leave if greyscale cant get a ETF

does not sound good

no wonder the CEO is on a speedy press tour writing letters and appearing on CNBC and yahoo finance on same day

usually if there is a no risk, (normal boring day activity) it does not need this rush to media activity

sorry greyscale but if you are offering an exit, allow 100% to exit not just 20%
YOUR SUPPOSE TO HAVE ENOUGH FUNDS TO COVER EVERY SHARE

now im sober. and able to run some numbers

so GBTC:
$10.5b asset locked (20%=$2.1b)
692,370,100 shares (20%=138,474,020)

ok so 1 share
share cost $8.13 (should Greyscale buy back)
collateral it unlocks $15.16

so if grey scale buys back 138,474,020 shares at a total cost of $1,125,793,782.60 they can then unlock
$2.1b of assets (20% of collateral)

Daltonik

legendary

Activity: 2618

Merit: 1505

I received a New Year's newsletter from Grayscale by email, which mainly concerns the actions of the company if the Court of Appeals of the District of Columbia decides not in favor of Grayscale. And as they write, if it fails to succeed in all possible courts as well and the company comes to the conclusion that there is no way to introduce legislative or regulatory clarity that would allow GBTC to be converted into an ETF in a reasonable time, then Grayscale will consider other options for returning part of GBTC's capital to shareholders such as a tender offer of 20% of GBTC's outstanding shares, but two separate permits must be obtained for this:
1.Granting by the SEC an exemption from certain requirements applicable to tender offers in order to ensure that the tender offer is fair to all investors.
2.Obtaining shareholder approval to amend the GBTC trust agreement.

https://grayscale.com/end-of-year-ceo-letter-to-investors-2022/

franky1

legendary

Activity: 4424

Merit: 4794

"bitcoin that would be held by greyscale ETP trade on concededly "unregulated" spot-trading platforms"

lets translate that

"we cant regulated a ETF because the asset will be traded on something unregulated"

thats like saying.
we cannot put cooked food on a plate because the plate has "no cooked" food on it

..
well regulators.. here is the thing
because bitcoin stored in coinbase vaults, is working as a commodity*
coinbase is regulated by CFTC in this manner. so the underlying asset is regulated

thus because CFTC regulate coinbase thus bitcoin. the SEC can then allow greyscale to have by SEC future approval regulated shares**..
by which .. by then regulating the shares**.. SEC can then regulate the OTC trading platform to then allow them to trade those shares

so the SEC can regulate greyscale and thus greyscales chosen market it wishes to trade on

*commodity(raw product used to create other products(collateralised shares**))

**shares(in $ format which is treated as $ equity/debt (securities))

EDIT

turns out....
via coinbase site

Quote

Coinbase, Inc. is licensed to engage in virtual currency business activity by the New York State Department of Financial Services. Coinbase, Inc. is not registered or licensed with the U.S. Securities and Exchange Commission or the U.S. Commodity Futures Trading Commission. View our licensing information here.

ok greyscale.. time to move your coins out and store into a wallet and thus business that can be regulated

i was first thinking that coinbase was regulated and the ball was stuck in SEC court for falsely denying things
turns out greyscales funds are locked in a business thats not regulated..

dang greyscale.. !! get your act together

Daltonik

legendary

Activity: 2618

Merit: 1505

The SEC has submitted a response to the lawsuit filed by Grayscale Investments over the rejection of their application to convert the GBTC trust into a spot bitcoin ETF. The regulator considers the refusal justified because in their opinion spot and futures ETFs are fundamentally different products.

Source: https://grayscale.com/wp-content/uploads/2022/12/Reply-Brief-of-Respondent-SEC-12092022.pdf

Daltonik

legendary

Activity: 2618

Merit: 1505

Quote from: fillippone on December 08, 2022, 06:36:31 PM

Another day, another record.

On December 7th GBTC closed with a record negative discount of 47%

There is no end to this pain trade, and I guess more has to come until something finally breaks.

Yes, you are right that it looks like this is already some kind of turbulence and how long does it have to last to start a reversal? The discount is breaking new and new records with each reporting day and has now reached -48.62% as of December 9.

franky1

legendary

Activity: 4424

Merit: 4794

the answer is MATHS

staying as they are
2% of GBTC and 2.5% of ETHE is only at most
~$220m and ~$100m (rounded) = 330m a year income

which wont fill the DCG $1b hole this year will it!?

if greyscale wanted to do a "buy back" of SHARES
buying back the other crap coins wont net them $1b even if they bought back 100% of multiple trusts because their holdings are way under $1b of value of other crapcoins each

however
ETHE does have $3.9b of holdings
so its the only option, bar gbtc
so
buying back ETHE shares is cheaper to do, to get to unlock a stash of coin out of trust.. to then sell

they then sell the unlocked ethereum coin. and then sort out their corporate holes

ETHE holdings per share is the asset value locked
market price per share is the offer they give to customer of the trust
there is about a 50% discrepancy in the 2 prices

they have ~3mill ether coins
lets say they want to buy back just 1mill

so they pay their trust customers the $6.16/share to buy back enough shares to get 1m coins unlocked.(rounded $640m buy back cost)

which then nets the $over $1.280bill to play with

they can then sell ether coins on the public exchange markets. to fill the $1b hole

and then using the $280m spare($1.28b -$1b)
start a fresh ethereum coin public buy up from the public exchanges at a new lower public exchange market price next month, compared to this month market price

and put back in X ether to sit along side the 2m ether they still have locked in trust, hoping that the public market corrects down enough to get as close to able to buy back 1m ether to be back where they sat today

JayJuanGee

legendary

Activity: 3920

Merit: 11299

Self-Custody is a right. Say no to"Non-custodial"

Quote from: franky1 on December 09, 2022, 03:24:02 PM

Quote from: JayJuanGee on December 09, 2022, 12:47:12 PM

Quote from: franky1 on December 09, 2022, 12:09:33 PM

so while ethereum is at a bubble high premium being artificially held up due to arbitrage.. where its now underlying value is just $50.. ethereum market price would and should tank and correct down to a newer low level too. so i would take out the ETHE and drive that market down and reap rewards for it. allow it to settle and use that fiat to bring DCG back to liquidity

then maybe start a reset ETHE fund again at the amounts it should be trading at

I don't see how taking Ethereum out of their product offerings would generate any money for them in the short term, unless they might be able to sell that division off to someone who might be willing to buy it.

So, in that regard, they could sell all of the shitcoin trust products, but they generate money from each and all of them, even though all of them (outside of bitcoin) are shitcoin-based, but likely customers still believe that it is smart (those dumb fucks) to "diversify" into a bunch of crap products.. which earns DCG money, even if the underlying is a bunch of crap.

first of all. ethereums market price is being unsustainably held up via arbitrage, not real independent speculative trading.

ethereums price is at a 20x+ premium bubble compared to new value level
(PoS dropped value by 20x but the market didnt correct accordingly..YET)

the price WILL correct. so best to sell coin. before the dump/correction hits.
very rough numbers of value to price multiplier
price value
jan 3000 800 3.8x -|
feb 2400 815 2.9x |
mar 3000 830 3.6x |
apr 2800 845 3.3x \_ only had a 4.5x bubble at most
may 2000 860 2.3x /
jun 1000 875 1.1x |
jul 1500 900 1.7x |
aug 1500 925 1.6x -|
sep 1400 40 35.0x PoS merge
oct 1300 45 28.9x
nov 1200 45 26.7x now has a 20x+ bubble.
dec 1250 50 25.0x

EG imagine if when bitcoin was at its 5x premium($70k price of $15k value) and you knew eventually it was going to correct to ~$16k. would you hold at $70k or be selling at $70k

and thats my point
ethereum is going to correct down to a lower price as 20x+ bubble is not sustainable.. so it will to get nearer to its new lower value down to a new 4x max of new low value.. so its stupid to hoard it at its bubble price now.

sell now, short it. and buy in at lower price.. keep the profits

use profits to add liquidity to the other sister companies to offset any further contagion risk

bitcoin is already at/very near value. it cant really tank. thus no opportunity to short/sell for profit. so no point removing a GBTC to sell the btc coins to add funds to sister companies.

but you are right there are some other crap coins greyscale can remove first but their price:value is not as huge a bubble compared to where ethereum is right now. ethereum has more crash potential out of the lot of them.

also the other crapcoin trusts.. dont have much AUM to actuammy make a difference

EG if DCG is $1b in the hole(debt) due to sister companies. they need to generate $1b quick
if they sold all "filecoin" .. that wont even generate $1m let alone the needed $1b

where as ethereum AUM is at $3b.. but if you calculate the underlying value of 153m if you work out the real underlying value chance since the PoS change

so selling just $1b of ethereum now. gets them their $1b. and when the correction happens then they can reset and buy ethereum at the new low when the correction happens

As I tried to already assert, I am still having difficulties understanding how Grayscale is able to generate actual money from what you are suggesting that they are able to do - because they actually cannot sell ethereum and various shitcoins merely because those shitcoins are in their trust and they are holding the various shitcoins on behalf of their clients. Accordingly, Grayscale has to hold the funds, and they generate revenue (2% or whatever) from holding/managing the funds, so in that regard hose shitcoins are client funds, so sure clients can sell those kinds of shares in those shitcoins which would then cause Grayscales management fees to go down, and so Grayscale makes money by the fees that they generate from holding those various shares that they created, and the shitcoinst hat they would have bought would merely be the underlying assets of the shares. Grayscale wants to hold as many shitcoins as possible in order to generate more fees, so even if the price of the underlying asset (and the reflected shares) are down, Grayscale still generates fees, just a smaller overall amount if their clients do not sell any of the shares.

Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 17. (Read 17264 times)