Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 44. (Read 17175 times)

All asset and wealth management firms rip-off their clients with unnecessary fees and premiums on their services. It doesn't matter if it's bitcoin or oil or an AI technology index. They will suck the lymph out of their clients' money to grease their never-ending mechanism.
It doesn't surprise me. And 2%, to be honest, doesn't look very high to me.

Grayscale is a middle service for their customers. It is not a fair and exact comparison but can consider the interests Grayscale have from customer investments like what crypto exchanges get from trading volume on their exchanges.

The higher the volume is the bigger income from trading fees exchanges will earn. Their earnings are from percent of trading volume and the distributions of taker, maker fees on their exchanges. Some big exchanges accept to list shit DeFi tokens only to get earnings from trading fees and listing fees. Small exchanges have more reasons to list shit tokens or altcoins.

Grayscale contribute to increase bitcoin adoption and they shed a light for institutional invesments, I appreciated it.

It’s a love-hate relationship the one I have with Grayscale.
Love, because they are eroding bitcoin whales stash, putting bitcoins back into circulation instead of letting them buried in some obscure cold wallet. And ultimately bitcoin has value if someone uses it, we cannot be all holders!

Secondly, Love because this transfer from weak hands to strong hands is what makes the stock to flow work like a clock.
Third, also love because they are a tremendous organisation. They know their work very well and operate with sheer efficiency in what they are doing.

But I also hate them:
The first reason why I hate them is because they take no risk, this is not their money, it’s client’s money.

I hate them because they rip-off the final user, the retail one:they have a 20%+ premium on their BTC funds. And when you get your precocious shares, they start eating straight away an outrageously high 2% fees. 

Third I hate them because they can do so because they are a monopoly. In Europe we have several ETP: none of them has a significant premium over the NAV. yet all of them have a 2% management fee: the competition is going to hear in that direction.

Fourth I hate them as they will be wiped out by a SEC approved ETF in the US. In a matter of weeks their coins would flow towards the leaner, cheaper structure. I am not suggesting they are lobbying against it in the US, but the chunk of business they would lose is Huygens!

Ah. I also leve them because of this thread!

I don't exactly feel sorry for the hedge fund crowd.  Beyond that I'm honestly not sure how to feel about it.  Is it maybe a good that they're on such a secure financial footing with a lucrative business model if they're holding vast sums of BTC?  I certainly don't think it would be beneficial to see headlines about them having money troubles if they're so closely associated with Bitcoin now.  If it's inevitable that institutional investors are going to get involved, arguably it's better if the ringleaders of the circus aren't taking any adverse risks?  Or have I got this all wrong and maybe they're using that extra premium to continually eat the green candles?  Are they taking a big risk in buying so aggressively?

Grayscale has been sucking bitcoins like a giant supermassive Blackhole lately:



They bought more than 150,00 bitcoins on the last 100 days lately, and they are accelerating:



They are buying more bitcoins than ever, and they are not being stopped by high BTC numbers: actually they are increasing the rate (Giffen Good yet to be dismissed).


Just to derail the thread one moment.
 I want to highlight the nonsense hidden is some numbers here in the following daily recap


https://twitter.com/Grayscale/status/1333528369737199616?s=20

This is fucking ridiculous: look at the premiums!
Let's put it on a spreadsheet to better understand what we are talking about:



Who's so desperate to buy Liteocoin at 5,100 USD? I would sue my fund manager (if I had funds to manage) if I find such a purchase on my balance.
Not to mention Bitcoin Cash at 4,100 USD.

The Grayscale Bitcoin Trust is a supermassive black hole that is devouring all the institutional fiat money looking to be profitable over the long run. I should be impressed but I am not because this was inescapable. Thanks for your timely updates how can you cope with them so fast  

Apparently a hell of lot of money is going to be poured on GBTC:


https://twitter.com/kerooke/status/1332814031179165697?s=20

This is a lot of money. And a typical case of someone not being able to get exposure directly on BTC, hence ending up paying 2% annual fee to Grayscale for holding their coins.
Please note that this is a real investment: Guggenheim are putting their own money at risk, not client’s.
Brace yourself for another 25,000+ BTC on Grayscale (worth more than 1.5 BTC daily, riskless)

In this case, as I wrote in my above message, Grayscale is the perfect toy to you: tax deferral is only one of the plus you have into this game. Playing the arbitrage game might be another one.
Guess what: being an accredited investors has no downside, basically!

I am an accredited investor and I would be contributing bitcoin in kind so I dont have a taxable event. I would get shares equal to the value on the NAV and not pay the premium. The goal is if btc does something crazy and goes to 100k, I could take a loan out for near nothing, against my shares and never have a taxable event.

It doesn't look a great idea to me: do you really want to buy bitcoin with a 20% premium only to have a cheaper loan?
I am not sure about your fiscal and regulatory framework, but I guess the saving you can have on the loan side of the deal is minuscole compared to the premium you are going to pay on the "grayscale secondary buying" leg.

A completely different consideration would have been made if you were an accredited investors with some restricted GBTC shares. There could be a good deal.




As I said in the OP, there are a large numbers of subject that cannot hold BTC on the first place. For them the only way to get exposure to BTC is getting trough Grayscale or similar products.

Grayscale buys SOME of the bitcoin in their fund. About 70%-80% are people contributing btc and getting shares issued. There are benefits to having shares instead of actual btc if you want to take advantage of certain programs offered by legacy finance (or if you dont want to worry about custody). Im sure theres also people arbitraging the premium.

So Grayscale buys bitcoin in behalf of its clients, most of them must be institutional investors or companies, otherwise they could've bought bitcoin themselves, why having some intermediary.

Does anyone know if you can use GBTC as collateral for collateral stock lending from a place like td ameritrade? They offer loans pretty cheaply at libor + a percentage, as low as libor +1.5% if you take a larger loan (3mm+).
Going to contact them next week and see. Might be a decent move to put a little money in there if I can take loans against it (in a cheap way), a couple years down the line.

Grayscale just has his biggest inflow day ever when measured in USD at almost 194,000,000 USD and the third best day when measured in BTC at 10,577.



As per the attached spreadsheet this quarter is spectacular for Grayscale, as it is crushing every possible record:

• Grayscale has been buying a daily average of 1,500 BTC
• We are a little bit more after half of the quarter and the daily inflow average is almost 1,500 BTC. Bear in mind the daily mined bitcoins are 900.

• The projection for the EOQ is of a total of 137,000 BTC: more than the double of the last quarter. 

Only just remember that Grayscale inflows can be not only outright buys in the open market, but also can be some "in-kind" buys by bitcoin whales, that can invest in the fund simply giving in their coins, profiting not only from a fiscal stand-point, but also  from the premium cashing-in strategy.

The Grayscale march has been impressive:
Just a couple of graphs.
The following graph reports the  BTC inflows (red Bars) that made the Grayscale AUM, measured in BTC grow:



You see that, despite the price appreciation, the inflow has been constantly growing recently.

In the second graph I plotted the rate of increase of the AUM, measured both in USD and in BTC.
This means: "Which percentage did the AUM grow in the last 100 days?"



So, for the BTC line I compute the sum of all the BTC inflows during the last 100 days (131,800 BTC on Nov 19), and I divide it by the total number of BTC held (515,000 BTC); this gives me the growth rate during the last 100 days of approximately 25%.

One interesting fact is that, apart obvious short term differences, the growth rate are  almost similar in BTC and USD: this means that the growth has been constant and organic in the period. Apparently also higher BTC price call for bigger inflows.
Another reasonin is that maybe Bitcoin is a Giffen good?

Nothing.
Grayscale do not owns those bitcoins. Those are clients’ money and Grayscale just manages them.
This is a big difference compared to other companies that actually owns bitcoins, like MicroStrategy.
Learn more here:

Bitcoin Treasuries

In addition to that, this (incredible) result has been made greatly easier by the growth of BTCUSD price, not the inflows in their funds.
Of course Grayscale is riding the momentum as per marketing purposes!

OMG, what are they going to do with so many bitcoins? Just hodl or maybe some other purposes.

It has been reported many times on this thread, and is something very easily trackable using the spreadsheet.
So yes, I think all of us saw that.
This is actually the point of the thread: build knowledge first-hand, without delegating this kind of low effort analysis to news outlet.

You saw that? - 500k


https://cointelegraph.com/news/grayscale-now-has-half-a-million-bitcoin

I am afraid they do not have any plan or strategy to buy the bitcoins. They only react to money inflows of in-kind buying.
This is their business model: they don’t risk their own money, that would require a proper buying plan, but they only look for their risk free daily management fees of 27 bitcoins. Whatever the price their client get long bitcoins.