Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 17. (Read 16372 times)

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

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? 

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

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)


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.

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

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

well

"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)

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/

"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

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

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

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.

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

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.

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

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.

The punchline seems to be that DCG has a short-term liquidity issue and they are having trouble finding someone to loan them money, even though it seems that there could be some ways that their current customers (or is it working out a deal on the genesis side of the matter) - might be able to work out some kind of a deal.. to allow the short-term liquidity to NOT be detrimental (and that kind of solution would almost be like getting a loan and solving the short-term liquidity issue).

if i owned DCG and thus greyscale. my smart move would be to take out ethereum from the game

bitcoin and ethereum are not some vapour priced social drama speculative assets. they both have underlying value. this is the base cost of acquisition on the planet.
bitcoins mining cost has a base level of year: $15k meaning that the speculative market premium above this of public exchange price is GREAT value(cheap) level right now(compared to premium ATH of $70k)

however ethereum speculative price is now way way way too high above its base value level due to the underlying cost of coin acquisition  dropping due to the switch to PoS(coin creation cost is now negligible amount compared to before)

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

Coindesk share the pain of the GBTC holders:

Grayscale Bitcoin Trust Discount Widens to Record High Near 50%





Coindesk is part of the DGC empire, so you cannot expect a fully independent audit of those facts, but in this case they were quite objective in reporting the various causes of these shenanigans.

when greyscale, and thus DCG are only earning under $220m in fees (2% of 11bill) a year. but are showing they are paying out BILLIONS to bail out other businesses. and taking on debt within the DCG .. there is alot more risk on GBTC users NAV value than just the GBTC discount (that may never come to fruition as something they can take out full btc discounted)

so primary risk
GBTC customers cant take out btc from GBTC

secondary risk
greyscale cant know where the $11b btc collateral for the GBTC is due to coinbase security

third risk
DCG mother company has more outgoings than incoming,
which can mean if DCG, coinbase or greyscale had to close trading/services. then those coins get locked into some creditor lump of all creditors(broadly not independently)
which then becomes a first come first serve all you can eat buffet of everyone taking smaller portions due to less supply of a high creditor demand lunch

especially if coinbase had to close. the GBTC coins get mixed into a single pot of coins of other coinbase users, (GBTC as creditor is treated as one of many creditors merged together)
 and then split based on creditor % of loss evenly..

in short.. not-your-key-not-your-coin

buying actual bitcoins and sole custody them is different than investing in some business share that cough promises cough to back at a peg of 1:moving rate
be prepared to lose more then just the market rate if things go bad

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.

Your above link is messed up fillippone.. but the article was easy enough to find.

https://www.theblock.co/post/191776/gbtcs-near-11-billion-assets-under-management-pose-a-risk-in-the-bear-market-ubs

I largely agree with you that The Block (author Adam Morgan) seems to be exaggerating the magnitude of the situation, including emphasizing a lacking of options - which still remains a bit unclear to me in terms of what options are present and may result in a resolution that does not necessarily require liquidation of the coins and/or liquidating of the currently existing cashcow funds.

Now it's the turn of a Wall street bank to spread some FUD on Grayscale.


GBTC's near $11 billion assets under management pose a risk in the bear market: UBS

This is the summary of the paper from The Block:


Looks like this is rocket science research!
/s

GBTC has been trading with a negative premium for over 18 months now. It shouldn't be something new to the average reader of this kind of paper.

Regarding the second point, the UBS analyst tries to figure out what could happen in a dissolution event of GBTC:


Still, there is no reason that the trust could be dissolved by giving Bitcoins to the shareholders instead of cash.
This is an extremely interesting point, yet it is difficult to assess precisely if the dissolution implies the liquidation of BTC or only their distribution to the shareholders.
But in the end, it is because it's worth paying professional journalists in this matter instead of relying on anonymous profiles on a bitcoin forum over the internet!


I will try to read the original article by UBS.


EDIT: above link has been corrected. Thanks, JJG.

https://dcg.co/portfolio/#c
oh look coinbase

also
https://www.crunchbase.com/person/barry-silbert

also
https://www.omersventures.com/portfolio/digital-currency-group/

need me to go on or can you google too?