Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 35. (Read 17091 times)

Well one thing is "being serious" about converting GBTC into an ETF - but another thing is getting approval - which has been being requested by a variety of companies since about 2014-ish - starting with the Winklevoss petition and many subsequent denials.. .

sure, maybe "this time is different", and there is a certain amount of arrogance (or is it telegraphing of confidence?) in regards to Grayscale obtaining approval amongst some other possible equal if NOT some superior competitors - which yeah, some of the latest speculations have seemed to suggest that the US govt has waited so damned long in making any kind of approval that they would likely be forced into approving several ETFs at once and letting the various ETFs providers fight it out (again assuming that Grayscale might have some insight into some kind of pending approval(s) in the ETF direction in the USA). 

We surely live in interesting times no matter the direction of ETF approvals in the USA, whether it is: 1) ongoing delays in approval (which likely is going to cause more and more traction of BTC ETF products in other countries - which surely would be an uncomfortable USA position), 2) denial of BTC (and presumably providing some kind of rationale that makes sense - which likely leads to similar problematic situation as described in scenario 1 above), or 3) approval of one or more ETF(s)... (another uncomfortable position in terms of how much control the US Govt might have in terms of the signal that such an approval would give - including likely outrageous BTC price appreciation - which the US Govt is NOT very comfortable with such a scenario, either). 

No matter what happens, it seems, US Govt is likely uncomfortable with this BTC asset class that is continuing to grow into some kind of asset class that cannot be kept off the radar.

https://mobile.twitter.com/BarrySilbert?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1372173279742545928%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.coindesk.com%2Fgrayscale-offers-new-trusts-to-invest-in-five-more-cryptos-including-filecoin-chainlink

https://grayscaleinvest.medium.com/grayscales-intentions-for-a-bitcoin-etf-b11e4faf4c05

As a GBTC shareholder, I just received an email from grayscale stating their intention to convert to an ETF. Maybe they are really serious about turning the trust into an ETF. The big question then is what will their fee be when it does happen.

I don't know why, I missed this interview to Michael Sonnenshein, Grayscale CEO, about current situation in GBTC and future views.

Grayscale’s Sonnenshein Addresses GBTC’s Collapsing Premium


Quite interesting.
Just remember that both Coindesk and Grayscale belong to Digital Currency Group, so for sure, this interview was another "tool" for Grayscale to communicate with investors and pour some water on some hot topic around GBTC (fees, competition, negative premium, ETF approval etc)

Absolutely.
Something must change in order to have a 0.25% fee on a BTC ETF.
At the moment I think the cost of custody of professional solutions, the only viable option for an institutional investor (TLSA and MSRT are doing differently, but they are not financial investors), is in the 0.5%-1%.

This is massive, and ample space to decrease to to the peculiar feature of BTC: contrary to everything else in the world, storage cost are not proportional to the quantity  of the gold, oil or soybean to be delivered, but it has a flat cost: securely storing 1 bitcoin cost exactly as much as storing 10,000.

And as you said, cost of storage is the “floor”, the minimum fee amount for any financial product.

Seconding fillippone, 2% is absolutely obscene for a passive fund. Also, over time a 2% decay vs a 1% decay is a massive difference for long term shareholders.

My guess is that US ETF's, whenever they come, will have fees less than 1% and more than 0.25%, just because they will have to factor in the cost for safe custody of bitcoins.

@DaRude

I use to believe this as well, and I guess I still do for a direct bitcoin play, but now I cannot ignore the risk of a permanent 2% fee and what it implies. I need to investigate if there are other options.

I could try to open a Fidelity account, and move some funds there. They seem to offer BTCC to US clients. Or invest in indirect instruments, such as Microstrategy. (which I did, and believe MSTR is now fairly valued and have since moved 1/3 of my GBTC to MSTR)


I think the risk of a permanent negative premium is high because investors in secondary market will be more cautious at buying GBTC. Investors see that an ETF is on the horizon, or find some way to invest in the Canadian ETF's (Fidelity seems to offer it to US investors), or do what I did and put some money into an indirect bitcoin vehicle for now, like Microstrategy, or they can wait. This will remain unless Grayscale reduces its fee.

Of course, it is an oversimplification, and those dates should be taken as vague references to the selling pressure that should be luring in the market around those dates.

Even that selling pressure is not guaranteed to materialise, as there are more sophisticated ways of playing the "squeeze the retail" game.

One of those being the hedge with futures, as I explained on my thread:
Everything you wanted to know about BTC futures but were afraid to ask!

Think it's safe to assume that hedge funds that played on the premium are sophisticated enough to spread their sales. Doubt they sell all the shares the day they become unlocked. I'd expect their exit strategy to stretch well into September when current stoppage of share issuance will materialize.

Edit: Even with the stoppage it still averages out to BTC1800/day. It'd be insane for anyone to expect any other outcome when they see that thousands of BTC will be unlocked every single day, by allowing that to happen GBTC did a disservice to the market and their customers

Oh i'm all for it, and think now would be a perfect time for GBTC to drop their fees to say 1%. Sure we can talk about averages in traditional finance, but in BTC realm the reality is the current alternatives Canadian ETF BTCC, and EBIT charge 1% and 0,75% respectively, which as i understand are not even alternatives for US retirement accounts. Until we see US ETF with 25 basis points in fees GBTC (after current glut of primary shares in 6month pipeline are absorbed) will continue on with their premiums

According to my computations, we should now enter a few easy days for GBTC.
Looking at the inflow/outflow Graph we see that there aren't any big outflow forecasted in the next few days:


Actually, looking at the table, we see that six months ago they temporarily stopped their subscriptions. As nobody could but six months ago, now no-one is being released from their lock-out period in the next weeks.



We will see if and how much this will impact the negative premium.

Selling pressure should resume about mid-April.

Just remember we are talking about passive investments funds.
Many of those types of funds in traditional finance have commissions up to 0.25%. Many of them are actually free, as they are building block for more complex products, or are actually used to lure customers into an investment relationship.

Not following how you managed to come to that conclusion. Premium ultimately comes down to demand on the secondary market, if there's net demand there will be premium, if for some reason demand disappears then there will be discount. For demand to disappear there must be another more lucrative alternative for US retirement accounts to get exposure to BTC. Without US ETF GBTC still seems to be the only play in town.


From the article
https://seekingalpha.com/article/4415487-greyscale-bitcoin-trust-buying-bitcoin-at-a-discount

BTCC fee is 1% https://www.purposeinvest.com/funds/purpose-bitcoin-etf

This sounds like shitty journalism is 2% really "egregious" compared to 1%?

Mhhh implausible scenario.
Ok, everything you say has a logical meaning and could probably become true. But the question is: why?

Why should Grayscale kill their own goose that lays golden eggs?
They have been running their business since a few years ago: they know what they are doing, and they simply won't let it slips out of their hands. They are I think they are actively bribing the G-men to delay as long as possible the EFT approval so that they can be running their high fees business for longer before they will convert their GBTC trust.

Guys,

I'm beginning to have second thoughts about investing in GBTC.

Consider this scenario:
Grayscale never converts GBTC to an ETF, never adds a process for bitcoin redemption, and keeps its massive 2% fee. They make noises about hiring ETF expertise, looking at ETF conversion when the SEC allows it, and looking into someway for bitcoin redemption, but in the end they don't have to do any of that. The bitcoins are locked in the trust, and Grayscale can just sit and eat 2% per annum.

This will imply the negative premium will be permanent. No new institution will put money or bitcoin into GBTC. People would not buy GBTC on the secondary market except at steep discount. This $250 million share repurchase will probably not do anything to reduce the discount.


Credit to poster below for this scenario:

https://seekingalpha.com/article/4415487-greyscale-bitcoin-trust-buying-bitcoin-at-a-discount

.... But i believe GBTC is still the only alternative for US retirement accounts. It's just a matter of options, if you're able to do so, buy the real thing, if not it's an alternative that might work for you.

GBTC is also a 1000 pound guerilla, a good indicator of markets interest in BTC if you know how to read it
[/quote]

@cryptoboss2020, THIS!!

I am in the US, and have retirement accounts that I want to have exposure to bitcoin. I can't buy bitcoin directly in those accounts, so GBTC is the only way at the moment.

I mean I could also invest bitcoin indirectly, by buying MicroStrategy, Riot Blockchain, and such other stocks, but these do not necessarily track bitcoin price movement. And they are highly speculative. I was a miner once, and mining goes through BIG boom bust cycles, and I think you would be crazy to put money into public crypto mining companies at their current prices unless you want to speculate. MicroStrategy is interesting, but I have no idea where they are going...are they pivoting from a Business Intelligence software firm (with declining revenue mind you) to something in the blockchain space? If so how will they do it and how will they get past the current shortage of crypto software engineering talent?

Another day, another (negative) day for Grayscale:



The premium is now constantly in the -10% zone, with the other day a new record of -14% premium.




I guess this is becoming tempting for an arbitrageur to play, but the lack of support makes me think I am missing something.

Well, I guess that we will know more by reading their usual End of Quarter Newsletter.

Agree.
There are a lot of people that do not want or simply cannot touch real bitcoins.
People not familiar with the technology, someone who is worried about the custody, as per legal/fiscal and inheritance issues. Or there are many subjects, typically corporates and or investment vehicles, who simply cannot touch any unsecuritized item, bitcoin include.
For each of those subject, GBTC is a good option. Above all, if there is a negative premium, meaning that they can purchase bitcoin at discount.
The important thing this is opt-in: you still have the default, fuck-the-middleman base scenario.

Of course the best option is to run your own full node and hold the real thing in cold storage, but paper BTC has its niche. Realistically speaking, there are people who just don't trust themselves enough to hold the keys or get so anxious that it effects their every day lives. Try explaining to gramma that she needs to safely store her mnemonic backup to her offline cold storage somewhere safe and inaccessible to others yet accessible enough for the inheritance purposes. GBTC used to be my go to alternative recommendation in such cases (now i'm leaning towards Canadian ETFs BTCC/EBIT simply because of their lower mgmt fees). But i believe GBTC is still the only alternative for US retirement accounts. It's just a matter of options, if you're able to do so, buy the real thing, if not it's an alternative that might work for you.

GBTC is also a 1000 pound guerilla, a good indicator of markets interest in BTC if you know how to read it

This is just the legimate pump and dump.
Coins Can Only Go one way!
You have to pump them!
Legit pump or not pump are pump.
Grayscale investors just invest and grayscale put the funds on the market and pump Up the bubble until it pops.


Thts what the Wall street do speculate and pump Up prices.
Bubble pops They buy Back cheap.

Every stocks are also just pump and dumps
So as Even real estate as gold price.
Just pump

DaRude, a simple question for you: do you trade GBTC? I mean do you have any position? Otherwise I fail to get your investment tip.
I think the majority here would never put a single cent on GBTC as we are all capable to deal with the real thing.
Maybe it is too late in my day and I misread but I am either being curious or a bit picky.