Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 18. (Read 17091 times)

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?

Not so sure about that.
What tells you Coinbase is part of the DCG family?
As far as I know Neither Coinbase holds significant investment in DCG, neither the other way round.
It would be also extremely unsatisfactory the custody of GBTC were given to an entity controlled by the same subject.
all I found is that DCG invested in some equity or token by Coinbase. But this is a completely different story.

It seems that regulators of several US states have seriously taken up Genesis Global Capital company and several other unnamed firms will check for attracting residents to invest in securities related to cryptocurrency without proper registration, as Joseph Borg, Director of the Alabama Securities Commission, commented on this investigation.

Source(full version by subscription only): https://www.barrons.com/articles/hormel-foods-hp-dividend-increases-51669404128
Archive: https://archive.ph/3z3Sr

"cannot"

a. coinbase is DCG family
b. greyscale is DCG family

if they are saying its impossible.. that is a lie

if you gave your wife $10billion.. to look after for you
and then you tell your accountant. that you cannot locate your $10b
and that your wife cant even tell you where she has your $10b

its not just bad accounting.. but its also time to get a divorce

if your wife sets a rule that you must comply to the wifes rule of never telling you where she put his money.. dont give her the money. dont marry her and find a better woman to marry


bitcoin is a very good system. you can organise funds very well.
its not rocket science.

if they are trying to say coinbase cannot tell greyscale where greyscale funds are. as the reason why greyscale cant tell the SEC.. thats bad

oh by the way
FTX is the brother inlaw and look what it done

Yes, but Greyscale cannot disclose public bitcoin storage addresses according to the Bitcoin trust's statement to the SEC dated January 2017, "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

DCG is grayscale. (insider knowledge/management)

greyscale(as legal entity "on the papers") owes debt to DCG

DCG(as legal entity "on the papers") is major older of GBTC shares

if grey scale showed any wobble in its accounting it cant escape. i see the smart business plan is for DCG to claw back its position first. get out its assets and demand all returns on debt first.

then let greyscale do as it pleases as in share out whats left to other creditors or liquidate

I would love to grab GBTC at the current discount and I personally believe people who do so will be rewarded. However, I’m not familiar enough with the structure of everything to know all the liabilities involved. If the parent company goes bankrupt, is the fund liquidated and investors get a return as the premium is eliminated, or are the fund’s assets sold off and creditors of the company receive the funds first? These are things investors should be aware of before diving in.

i know that it seems like a lot of addresses to churn through (over 800 addresses) but if an outsider can find the collateral . then certainly greyscale themselves can.. and publish regularly the totals and address list to be validated easily at any time by anyone that enquires.

if grey scale dont have to hand a readily available list of their cold wallet addresses themselves for internal auditing and security checking. then thats bad practice

Here in the network they tried to conduct, as the researcher himself calls it, an additional forensic examination with the help of which he seems to have managed to prove that as of November 23, Grayscale Investments through GBTC owned ~ 633,000 BTC on Coinbase Custody wallets. Due to the fact of reorientation of Grayscale from Xapo to Coinbase Custody, as well as using publicly available data, @Ergo was able to attribute 317,705 BTC belonging to GBTC to 432 addresses with a high probability.

To search for the remaining bitcoins, the blockchain was scanned and additional addresses were identified that correspond to the profile of those previously discovered, and these addresses contain almost the same remaining number of coins that should belong to GBTC.

Part 1: https://twitter.com/ErgoBTC/status/1594308379182305280
Part 2: https://twitter.com/ErgoBTC/status/1595504799016841216

   

What is with all these creditors demanding corps for their money back immediately "or else".

The "or else" is a chapter 11 bankruptcy and the creditors spending years in court fighting for assets.

Now how long do they think it will take for them to recover those assets if they go that route? Years, if at all. Remember that Mt. Gox creditors haven't even gotten their money back yet.

Why can't they just use their heads and reach a settlement with DCG, they will at least realize their own liabilities (the loans) quicker, and who knows, they might avoid insolvency themselves.

Creditors falling down like dominoes is not good for anybody, it's gonna spill out of the crypto industry and over to the greater world economy. At least we have the spill contained in the crypto world for now.

DCG's problematic asset is Genesis Global Capital and is currently working on all possible ways out of the current situation, judging by the fact that, according to The New York Times, the company hired the investment bank Moelis & Company to explore options, including potential bankruptcy, although according to a representative of Genesis, “Their goal is to resolve the current situation unnecessarily filing for bankruptcy”

I am not sure whether I understand all of the options, but it does appear as if there could be a variety of options and even flexible ways to both set forth a road forward that is clarified and to perhaps end up having some DCG compromise on the fees if it were to come from the shareholders agreeing to some kind of a loan to DCG.

Another thing that I had been considering - prior to even seeing Ryan's brainstorming through some of the possibilities, is that DCG and Grayscale might not be publicly disclosing a sufficient amount of facts in order for us to understand, because it does seem to me that if about a $1 billion raising of debt funding could resolve the situation, then  they should be able to raise that amount of money based on the facts that we see in front of us.. If the fund supposedly has around $10.5 billion in assets under management, then they should be able to raise in the ballpark of $1 billion in debt in order to pay off their encumbrances or whatever.. as long as they are really disclosing that the extent of their current encumbrances (and the fact that they really do have the about 634k bitcoin that they are supposed to have.

I am getting the sense that there is some information that we do not know about.. such as either further material level of encumbrances or perhaps a missing materially relevant quantity of cornz.

Am I just being paranoid? and overly conspiratorial?  Are there too many folks who seem to be lying to us about the cornz that they supposedly had.. or were supposed to have had if they had been managing their books and hedging their risks properly.