Topic: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! - page 45. (Read 16372 times)

Slightly off OP topic, but I didn't want to start my own thread as I imagine it can be answered relatively quickly.
My question is, which is the best tracker to invest in if you consider the euro will lose value in the near term and money will pour into the dollar?
These are the 2.
Dollar
XBT Provider Bitcoin Tracker One (BIT-XBT)
https://www.hl.co.uk/shares/shares-search-results/x/xbt-provider-bitcoin-tracker-one

Euro:
XBT Provider Bitcoin Tracker Euro (BIT-XBTE)
https://www.hl.co.uk/shares/shares-search-results/x/xbt-provider-bitcoin-tracker-euro

JP Morgan is going full bonkers about Bitcoin.
They are shilling Bitcoin to their clients now:


Family Offices May Now See Bitcoin as Alternative to Gold: JP Morgan Report








So, not only they are still upbeat about  future Bitcoin scenario, reiterating the bullish view on past weeks, but they are also telling us that many clients are already shifting their assets from "physical gold" to "digital gold".
This is very bullish given the sheer size of the JP Morgan AUM and the fact that their clients are certainly on the top percentiles of financial wealth.
 

Interesting metric: what does my Spreadsheet says about that?
Just adding a new Pivot Table in the spreadhsteet I was able to construct those graphs:





They look pretty similar, bar some not overwhelming differencies I couldn't reconcile.
After the halving Grayscale has been buying more than the daily mined bitcoin on several months.
October and November are also showing again surge in volumes.

What I mean is: what you are reading around on thwitter is already under your eyes, if you know where to look!

Today I've got an email from our local investment advisor community, Coindesk has organized an event for Financial Advisors. Michael Sonnenshein (Managing Director of Grayscale Investments) will give a valuable speech in this online event. The focus of the discussion is "How to promote Bitcoin with clients." there will be talks about the success of Grayscale too.

If you are a Registered Investment Advisor of any organization like Bank or Trust Agency then you can apply here to join.

For Application- https://events.bizzabo.com/bitcoin-for-advisors/home

Grayscale is a large financial fund and is planning to dabble in our crypto market. It is not a project, Grayscale gives confidence to fans of Bitcoin and even the crypto market.
So read carefully the article to better understand Grayscale, it will give you a lot of knowledge so you can dig deeper into the essence of Grayscale's strategy.

Another addition to the spreadsheet.
Who owns Grayscale shares?

Have a look here:



Here you have a manually updated list of publicly disclosed sources of GBTC holdings.
You can see the recent acquisition by BlockFi, as other joining in.
Can you also spot Barry Silbert himself?

Spot on fillippone: I was actually trying to understand such a move and now you probably gave the right explanation.
The bitcoin game is becoming too big and it started assuming all those financial dynamics that I believe the majority of cypherpunks would have probably rejected.
Let's never forget that for the financial world, right now, bitcoin is just another asset to be monetized.
Anyway, growing up is hard and I sincerely hope that the core will stay incorruptible.

Apparently Grayscale is luring into their shares also some investors that should be able to independently gain exposure to bitcoin:

BlockFi Acquires a 5% Stake in the Grayscale Bitcoin Trust (GBTC), Becomes a Top Shareholder


Ah! Someone explain me why should BlocKFi invest in Grayscale for any other reason than playing the NAV-Stock Market arbitrage on the back of the retail investors.
Give your bitcoin to Grayscale and in-kind buy the shares in the primary market (without touching a single USD). Then sell a future on the market. Wait six months, sell the shares, get your Bitcoin Back and buy back the futures.
You have just locked in a juicy 20% net profit on your bitcoins. Free risk.
GBTC is more than happy for this, as in the meanwhile they got a free marketing campaign (“BlocKFi just bought 5% of GBTC! That must be a super good investment! Let’s buy some too!”) and above all, 1% management fee. Again, net of risks.

Also, please tell the journalist to read this thread, so that he can do the proper math and exactly know how many BTC BlocKFi bought.

The filing was posted on October 15, the day after GBTC reopened the share issuance after a brief hiatus. That day they sold a little bit more than 7 millions shares. So BlocKFi surely was already long GBTC, but that last buy triggered the 5% reporting threshold.

The reason is probably the total wealth o this cohort is still negligible on aggregate numbers, so probably not relevant for this analysis trying to determine the impact of every segmentation on bitcoin price.

Of course this information is not relevant as a static picture, but is of an utter importance when looking at the demographic dynamic. When the 18-25 will move into the working age (and wealth accumulation phase), the investment in BTC will be more relevant, also because the less interested in BTC investing (over 65) will be pushed away...

It seems a bit illogical to me that only people older than 25 are taken into account, the same as those up to 64 years of age. I don't see why people under the age of 25 wouldn't be interested in Bitcoin, because I believe that we have a very large percentage of such members on the forum. On the other hand, people between the ages of 55-64 are taken into account, and the percentage of retirees who would invest in BTC is as high as 30%. The retirement age in the US may be different from the EU, but unless it is an early retirement, retirees would be those aged 65 and over.

Grayscale is definitely one of the main drivers of this trend, and the whole thing was actually accelerated by a pandemic that shook the already declining confidence in classic investments.

Grayscale is pushing full throttle on Bitcoin adoption.
They published a very interesting Report on Bitcoin adoption during last year.





I don't want to discuss the report in all the details: but only one slide is very interesting:




The only true dividing line between bitcoiners and nocoiner is apparently the age.
The time is on our side!


Read the full report Here

Ah, yes, Barry know exactly how to perform a good marketing stunt.
In a bull market you increase the AUM without doing nothing, as the AUM measured in USD terms grows only because the BTCUSD goes up.

What it really matters, in my opinion, is the total number of bitcoins under management.

One of the key aspect of the Grayscale Fund is the primary Market.
We have seen this market is not available to the retail investor, but only to institutional investors and accredited individual.
This is of course something that is not clear and the true key of GrayScale success.
The naïve Bitcoin Investor could thing Grayscale buys their Bitcoins  from miners, this is an interesting rhetoric, as it also fuels the "scarcity" theme, but it is ultimately wrong, as the main suppliers of BTC are the whales, who want to profit from the huge premium their shares have on the second market.

But what can we discover on this peculiar category of shares?
What can we infer analysing at this number? 
IS is true that aa large number of shares is bullish when subscribed, but an be "dangerous" in the future?

I will try to shed some light on all the above points.

---

How many Shares in the primary market are out there?

Of course there are many ways to discover the number of Grayscale shares, but the number is aggregate, and there is no differentiation from the primary and the secondary market.
The only place where we can have a "snapshot" of the situation is on the

Grayscale announced on January 21, 2020 To have been granted the status of SEC reporting Company:

Grayscale Bitcoin Trust Becomes SEC Reporting Company

This was interesting for our analysis for a precise reason:


So from 90 days after January 21st, March 20th 2020, the holding period of primary market share would have been reduced from 1 year to 1 month.

The easiest way to check the current number of restricted shares is to check the official GBTC market, that details such information on a page dedicated to the security details of GBTC.
This is what you see:


page link


On the security section you can see the details:

• Outstanding Shares: this is the total number of outstanding shares. This data is widely available.
• Restricted Shares: this is the number of shares with a selling restriction (six months from issue date)
• Unrestricted Shares: this is the residual category: common shares without selling restrictions

I have tried in any possible way to download the historical data of the restricted shares, but I failed.

So I had to think a different approach: to obtain this number with the available (public) data.
Every time a share get issued, and we know when it is done, that share get a six month holding period. So it is easy to determine which is the date until such a share will be restricted, and after that it will be unrestricted.
So the total number of restricted share will be the sum of all shares with an "unlock date" in the future.
Pretty easy to compute such a total with an Excel spreadsheet.
I added the "Restricted Shares" sheet in this thread's spreadsheet:


spreadsheet link

Basically the "Restricted Shares" column sums all the "Inflow of restricted shares" with an "Unlock Date" in the future.
Luckily the total I obtain in the spreadsheet is very similar to the official one listed on the website. There are a number of minor reasons why those two numbers are slightly different, but I think we can safely neglect those, and concentrate on the overall meaning of this information.

The first thing we want to do is graph this information and see how it evolved in the past
(as always, you can find a continuously updated version on the spreadsheet):



Wee see that, from inception, the total number of the outstanding shares is equal to the restricted shares. At the time the holding period was one year, so basically, for the first year of the fund the restricted shares were the 100% of outstanding shares.
Nobody could sell the shares!
After an year the shares began available to trade ,and the restricted percentage began to decrease (right axis).
Of course, the slower the rate of issuance, the lower the percentage of restricted share.
We see that during the years we had a percentage of restricted shares around 20% of total outstanding shares.

Things began to become a little bit animated during the last year. The rate of issuance begun to increase dramatically, so did the percentage of restricted shares, getting up to little bit more than 30%.
Then GBTC became a SEC reporting fund on Jan 21st 2020, and 90 days later, on Apr 20th 2020, the lock up period decreased from one year to six months: six months of locked up shares became available to sella all of a sudden.
We then  saw a drop in the percentage of restricted share down to 13%.
This drop was very temporary, as Grayscale wen flat out on shares issuance and was quickly back to previous level and beyond, now sitting at a whopping 35%.

One might thing then: "wait, if there's a lock on the shares, when there's  the expiry of the lock period the issuers will rush to sell those to cash in the premium right?
Well, I strongly doubt this reasoning, but more on that later: let's see how it works.

In the following graph , we can see the current date on the middle, separating the "blue part" from the "red part":



The blue part are the past inflows (measured in BTC) chronologically ordered. The span of the graph is exactly six months.

The red part of the graph are the "outflows" in the coming six months.
Basically the red part is the left one flipped and "netted" of the Grayscale commission over the period (yearly commission is 2%, so over six month I took away a full percentage of the inflows).
We notice we can precisely forecast when a "big inflow" will become a "big outflow".

Does it means that when there is a big outflows there is a heightened probability of a selloff in BTC because of the selling pressure?
No, definitely not.
As we have seen in the OP, probably he who buys the GBTC shares is also selling futures, so to hedge the directionality of their bet, and be sure to capture the premium on the secondary market.
So the overall effect on the unlock date, combined from the selling on the underlying market and the buying back the short future position, actually cancel out.

This is an analysis i have seen around in the last months, so I hope now you understand that it is (probably) meaningless.

---

I hope you enjoyed reading this post at least as much as I enjoyed writing it.
I think it is the first time I read such an analysis around, as the restricted shares are quite an obscure object for many.
But you are not "one of the many" if you are reading this...

Numbers have been released.
I just want to make some analysis detailing some aspects that I do care more about.
One thing I want to reassure you about is that from next release I will be able to track the data more effectively and I will be able to actually even better analyse those data before the Greyscale release!

So let's start looking at the AUM for every fund:



We see a major increase in the ETH fund, that rises from 9.50% of AUM to 13,70%. Probably the DeFi craze ad some effect on this, with many considering putting on long positions on the ETH fund.



The growth in the ETH fund is clear also from the AUM graph:



Of course the rise in the AUM as caused also from the rise in the bitcoin price, that inflated the value.

One way to look at the growth in the funds in BTC:



Of course also this measure is distorted. If BTC appreciates, for a given amount of USD of inflow, less and less bitcoin will be bought.
So looking at the very bullish flow of BTC investments, I am very confident on the marco trend of subscriptions.

Also a premium of Price compared to NAV has been under a sort of pressure lately:



It is still very high on my opinion, but it's far from historical nonsense high.


This is a very quick overview of the current situation.
I have some more insight in the making for you.
Stay tuned.



EDIT: I checked my predictions in this post, and I must say I was quite close to the official numbers. I fine tuned a couple of indicators, and I will be able to give accurate predictions, I hope.

The Quarterly results are out.


1.05 Billion certainly surprised on the upside, as I have been following quite closely the daily numbers, and I expected a lower number.

The core of the inflows was into their Bitcoin Trust:


Wow, this means other product experienced an incredible growth!
They were led by ETH fun, apparently, surely helped by DeFi Craze



You can download the report here.

It means?  Btc to up or down? 
I think it might go down as they just dump on USA dollar the btc

Just remember that the only one profiting from Grayscale are accredited investors buying shares in the primary market, that is now closed, by the way.
They might even be buying those coins with “in kind” purchases.
Basically: Grayscale is benefiting only those who already are rich, in fiat or bitcoin.

If it's not your BTC, then arguably it's none of your business where the money comes from.  But given that these are institutional investors, the money likely comes from wealthy individuals looking for better ROI than they might find on the stock markets.

And what do you mean by "where the coins come from"?  The same place where all other bitcoins come from, algorithmic emission through mining.

I was wondering if this Holy Gray(l)scale Btc buying frenzy could counter-oppose the almost certain troubles that the market will suffer due to the Bitmex, CFTC drama. It looks like the market is neither able or capable of understanding the importance that decisions taken by the likes of MicroStrategy, Grayscale etc. could impact the price on the long run.
Going back to fillipone data, now that the analysis tool is in place we only need to wait official data.