Bitcoin Forum

Bitcoin Exchange-traded products are arriving in Germany's Xetra.
This will give to German, Austrian Italian and UK investors the ability to get price exposure to Bitcoin, with the possibility to eventually redeem their own Bitcoin.

ETC Group to launch bitcoin ETP on Deutsche Boerse via HANetf (https://www.etfstream.com/news/11695_etc-group-to-launch-bitcoin-etp-on-deutsche-boerse-via-hanetf/)


One interesting aspect is the possibility to redeem the physical bitcoin:


A product that allows institutional subjects to gain exposure to bitcoin, without all the regulatory, fiscal and compliance nightmare implications of owning physical bitcoin, is a more than welcome news.


https://talkimg.com/images/2023/05/16/bloba60d839f06fc6cd6.png

Listed on Xetra starting from 17th Jun 2020.


It is possible to track the Official BTC Depositary Wallet via the blockchain:

https://bitinfocharts.com/bitcoin/address/35pgGeez3ou6ofrpjt8T7bvC9t6RrUK4p6

https://talkimg.com/images/2023/05/16/blobde1c31b0a7e5f47a.jpeg


In this spreadsheet (https://docs.google.com/spreadsheets/d/1o1lA-uF84ujg1CHmfy5_ZkJvzy1RY9lvW-eN1stwXTk/edit?usp=sharing) I computed the BTC held under the fund: as said, there was a massive growth until the present value of more than 3870 BTC:

https://talkimg.com/images/2023/05/16/blob5a9998b80d9b95c4.png

Please note the premium is confirmed to be really low, and the impressive growth of BTC held.

More information can be found here:

HanETF BTCetc Product deck: (https://www.hanetf.com/UsersFiles/HanETF/Documents/644/BTCE-Product-Deck.pdf)
https://talkimg.com/images/2023/05/16/blobb43ccc77a177e99f.png (https://www.hanetf.com/UsersFiles/HanETF/Documents/644/BTCE-Product-Deck.pdf)



World’s First Centrally Cleared Bitcoin Exchange Traded Product to list on Deutsche Börse (https://www.hanetf.com/article/409/worlds-first-centrally-cleared-bitcoin-exchange-traded-product-to-list-on-deutsche-brse)

A brief description on how a ETP is different from a Trust and a Future.
https://talkimg.com/images/2023/05/16/blobc1ecd21f0da879bd.jpeg (https://www.hanetf.com/UsersFiles/HanETF/Documents/738/BTCE-Essential-Guide-to-Buying-Bitcoin8062.pdf)

Official websites:

https://btc-etc.com/product.html
https://www.hanetf.com/product/8/fund/btcetc-bitcoin-exchange-traded-crypto-btce

It is a welcome news. The impact of ETF on the cryptocurrency market would be huge. The U.S Securities and Exchange Commission (SEC) has been delaying it's approval, but other countries have been adopting cryptocurrency and putting policies in place to support it's growth.

This could encourage their investors to learn about the technical aspects of holding and securing bitcoins, if there is an opportunity to redeem them

---

I just tried to access the updated link - (https://www.hanetf.com/article/409/worlds-first-centrally-cleared-bitcoin-exchange-traded-product-to-list-on-deutsche-brse) but couldn't, is it only accessible to specific regions?

True,
but this is important also for institutional investors. Many of them simply cannot "touch" bitcoin, even if they are willing to.
It's too complicated from a legal, fiscal and compliance point of view. It might also be outside their trading mandate.
This kind of problem solves a lot of issue for them.
Major loser: Grayscale, who won't be anymore able to sell their shares at an inflated premium to institutional desperate to get long Bitcoin.

In addition to not being able to market their shares, existing investors who hold them would be looking to sell them off at a lower premium to avoid being bad holders. This action could further drive the premium down causing more losses.

I doubt it will be huge, we already have plenty of platforms for Bitcoin derivatives, and nothing big happened, unless there's a strong proof that the price rise during the 2017-2020 period can be attributed to them. It's great that more liquidity is coming, but let's not create false expectations, we've already had so much disappointment in the past with all the ETF hype, when people expected it to launch the price to the moon.

I don't expect an immediate increase in price due, most of the purchases happen off exchanges and those that do happen on exchanges are done through an order routing process so there is no impact on the market price.
It's difficult to ascertain what increases the price long term, but greater liquidity and adoption would be a welcome development.

Well, Germany is actually quite crypto friendly, they had laws from very early on and they have allowed people to buy and sell easily and even had tax in place, they are always that organized whatever the topic is so it wasn't really a shock. It was only a matter of time someone did something like this on a bigger deal and obviously it is going to be big when it starts.

Unfortunately people put too much into stuff like this and expect a ton, remember the Bakkt times? When it first started everyone was expecting billions of dollars but that wasn't the case so there was a big sell after that when people saw it, what happened? It got bigger and bigger over time and now it is quite good in my opinion, but they weren't able to wait for it and wanted this on the first day.

Both points are very true.
Germany has a very crypto-friendly regulation. They were the first in the euro area to adopt the AML5 European regulation, that enabled German banks to take custody and trade bitcoin with clients (only to be beaten on the release time by the Italian soft bank Hype).

Also very true the analogy with Bakkt. We expected the floodgate of institutional money to open and flood bitcoin with fresh funds. This didn’t happen with big disappointment and also with some pain by speculators.
Will this time be different? There is some difference, the instrument has a different target, more focused on retail, rather than speculators like the CME derivatives. Also, it is redeemable in physicals bitcoin. Something that it is surely not possible in traditional markets.
We will see.

Like everything else that was going to 'save' us, it only counts when it counts. These things certainly do not create any hype, they will definitely empower the hype when it arrives from other sources. Anything that pops up on your legacy platform is many notches above having to photograph your arse to get on Yobit.

Very, very interesting to see -- though that expense ratio is TOUGH -- I guess that's the price you pay to have everything insured and held by BitGo. Just tough to see people not only giving up their coins (the good ole, not your keys not your coins), but also paying someone else to hold their coins.

Insurance, regulations, and all of that -- I get it.

Why not just go and buy a trezor, load some coins up onto it, and split your backup into some safe places. Probably cheaper then using this if you're putting in a substantial amount of money.

Still big news though, hopefully adoption and all that can follow! Would be great to be able to spend my BTC (and really any crypto, doesn't matter to me) in real life more often.

An article on the same subject by Coindesk.

Deutsche Borse Exchange to List New Bitcoin Exchange-Traded Product (https://www.coindesk.com/new-bitcoin-exchange-traded-product-to-be-listed-on-deutsche-borse-exchange)

The interesting bit on this article is the amount of surcharge of this ETP compared to others:

So, basically, 1.3% to get rid of all the custody, fiscal and regulatory hassles of being long bitcoin.
I think it's not a bad deal, in addition to that, competitive pressure will make this number go down in the future.

I see only one big loser in this story: Grayscale.

They are selling their shares at an inflated premium against the NAV.


This premium is quite consinstent:

https://talkimg.com/images/2023/05/16/blob1b4e4aeca3352fd2.png

Grayscale Bitcoin Trust Premium to NAV:30.40% for June 10, 2020

In the past, it has been consistently above 100% during BTC pumps back in 2017.
This meant buying bitcoin at double the market price.

So I think that paying 2% running cost against 30% upfront cost has some kind of rationale here.

Also, this bodes badly for Grayscale, who won't be anymore able to pump the price of their shares too much without losing inflows from clients looking for cheaper options.
 

I know right off the bat BitGo is going to be charging somewhere in the realm of 1% for all fees every single year (transfer fees, custody fees, and so on) The other 1% is pretty steep, I'd understand if we were talking somewhere in the realm of 1.25 or 1.5 -- but 2%, ouch.

We both totally know the type of person that is going to use this isn't going to worry about these slight differences, at least at first. But yeah, you're totally right in regards to competitive pressure is going to bring this down substantially in the future. Once their are a few more BitGo custody types and the demand is present in peoples regular retirement accounts.

Btw -- traditional etf's may average in the realm of .5-.7% -- but that shouldn't be the baseline as those are literally robbing you. Fidelity/Vanguard/ETrade/Schwab/BlackRock all have funds that follow the direction of the US stock market and cost from 0-.1% (Yes, I wrote 0, Fidelity, lol)

Grayscale is a poor investment choice.
Basically, new entrants pay a higher premium to insiders, only to buy artificially scarce shares.



https://pbs.twimg.com/media/EaPYYNpWkAAJKGv?format=png&name=900x900
https://twitter.com/RyanWatkins_/status/1271097895308218369

An ETP is immune from this fraudulent mechanism.
This is why 2% running fee is a steal!

Just as cross link, I've posted this into press too back then: https://bitcointalk.org/index.php?topic=5254440
Since I see this as an European version of Bakkt, it's a great support for European institutional money flow into Bitcoin market.
Thus cannot be bad, since it's truly backed with actual Bitcoin.

This could have been one of the reasons for the current price movements too. "Buy on the rumors, sell on the news" (or maybe I'm wrong)

It's the tax advantages that are attracting people as much as anything. There's no other product at present that can do the same thing. That 2% and whatever whacky premiums there are pale in comparison to the tax bill on a monster rise.

I am not sure I understand which tax advantage, specific of GrayScale, you are referring to. Because if it is not specific to Grayscale, if it can be replicated with lower fees, it would be vastly superior. If it's specific to Grayscale please make me clear why it is different from any other ETF.

It's the one and only Bitcoin-related product you can have in US tax advantaged wrappers like 401ks and IRA accounts and so on. There's nothing else that's been built to be eligible for it. That makes it compelling in a way nothing else is at the moment - to Americans.

Oh, sorry, I am italian, so it is not in my mind that you have to pay taxes on your crypto-gains. And also because I want to buy my coins in a KYC respectful way (https://bitcointalk.org/index.php?topic=5219223) (KYC is bad (https://bitcointalk.org/index.php?topic=5221497)), and I adverse anti-bitcoin organisations who sell my data to the government (https://bitcointalk.org/index.php?topic=5253616).

If you are referring to institutional investors, those who cannot dodge the legalised theft, well, yes. I do agree, but that is the only point of paying that huge premium.
But again, competition will eventually lower this premium in the long term.

A few more detail on the more "institutional money relevant" aspects of this product.

There is a nice read about this ETP from a traditional ETF news outlet:

 ETC Group to debut with bitcoin ETP on Xetra (https://www.etfstrategy.com/etc-group-to-debut-with-bitcoin-etp-btce-gy-on-xetra-48593/)



First of all: what does it means centrally cleared?
When you buy this product, you are not buying from the issuer, but from the German Stock Exchange, who in his turn, buys it from the issuer. So the exchange is acting like a clearing counterpart, who "untie" the credit relations between the two original counterparts, who are not facing themselves directly but are only facing the exchange.
This means that if the issuer defaults, you are not facing a defaulted entity, but the central clearing counterpart (CCP) who is kept liquid.
To sum up, the investors can actually get exposure tho this product neglecting counterpart risk, as the only counterpart they are facing is the German Xetra, which is one of the lowest risk counterparts in the world.

Also, another interesting piece of information I could, discover elsewhere:


So you are free to reclaim your physical bitcoin, but not really incentive to do so. Probably it is just a fail-safe mechanism to get hold of your possession in case there is a problem.
If an investor wants to get long exposure to physical bitcoin I would think about BAKKT 1 day futures, for example, just to name something very closely related to legacy exchanges.

It´s not through yet, it still needs the Bafin confirmation. That could take several weeks or make it even outright impossible to launch. It´s a good idea and worth watching how it develops but at the moment it´s just an announcement for a future release. Beside that, I don´t know how far their custody provider BitGo is cooperating with the German regulatory folks already, could be another obstacle if they need to apply for a certain license.

As far as I know the product has been already approved.
Citing the previous article:


Listing should commence on Jun 17th.

If you have different information, please share.

Regarding BitGo cooperation, yes this is certainly an interesting topic under many aspect. I suspect they will "analyse" the bitcoin they buy with a certain degree of care. It wouldn't surprise me giving priority to "clean bitcoins" e.g. Bitcoins from government auctions or coinbases.  (block rewards, not the anti-bitcoin organisation).

Gentle reminder.
Today is the day of the first trading of this product.
I fear a BAKKT-style launch. Great expectations, but delusion.
We will see. Your fellow Fillippone still has to discover the wallet addresses (should be public) where to track ETC holdings.
I will keep you posted.


EDIT: Nothing is currently trading, apparently delayed until tomorrow.

As I spread the fake news that the first day of listing would have been the 17.06.20 (actually I double checked with some external reference who still is in denial of reality), I felt a little bit in debt with the forum.

To cleanup my guilt I wrote an educated, typo free email and I contacted them.

They confirmed to me that:

• The first day of listing will be 18.06.20
• From next week the addresses of the wallets where the Bitcoins of the subscribers are kept will be publicly available

I think the second information is quite relevant. As it will allow the general public to closely monitor the subscription dynamics of that fund and eventually detect frauds (fractional reserve or other nonsenses) looking at official exchange numbers and blockchain mirror equivalent amounts.

Now that the first trading day it's over, let's see a few things:

First of all the price EUR 4,855 for each share.

https://talkimg.com/images/2023/05/16/blobd7ea5004a48ab645.png

They traded 31,463 ETC shares; for a value of almost 270,000 EURO

https://talkimg.com/images/2023/05/16/blob240bac2643696ac9.png

/ From the hanetf website (https://www.hanetf.com/product/8/fund/btcetc-bitcoin-exchange-traded-crypto-btce) we see the most interesting things:

https://talkimg.com/images/2023/05/16/blob71ab144098195088.png

Firstly we notice that the number of bitcoins controlled by each share has already decreased compared to the termsheet value of 0.001: every day the daily rate drops by 2% annually.
Basically the number today is

(Bitcoins For ETC)_t=(Bitcoins For ETC)_t-1 * (1-2%*gg/360)

Where gg = calendar days between t and t-1

Multiplying the price of the Bitcoin reference index by the Crypto entitlement we have the NAV value, expressed in dollars (the fund is quoted in different currencies and the official NAV is uniquely expressed in USD).
Well, the first, positive, surprise is that if we convert the NAV to EUR ( I used an FX rate of 1.12) we get a value equal to 8.46
That is, absolutely comparable with the market price (it is possible that there are differences due to the different detection methods).
In the thread on Grayscale (https://bitcointalk.org/index.php?topic=5256529) we have highlighted how the absence of a premium on the market price compared to the NAV can lead to have considerable interest in this tool.

Yep, I've been speculating that GBTC will be increasingly arbitraged from here on out as regulated securities and derivatives become more commonplace.

Why hold GBTC shares (especially if you bought through private placement) when you could pocket the 15% (>30% at times) premium, take the cash and buy a similar security near spot? Seems like a no brainer to me!

I have tried to explain in that thread. For instance, for many investors the interaction with GBTC are not taxable, or at least, are not immediately taxable. This could explain a lot. Also, many cannot buy other shares than GBTC's.

For sure this product, if successful, is going to put a lot of pressure on GBTC's shares.

A small overview of what has  happened during the first few days from the start of the listing of this ETC.

The listing started on the 18th, and the market has been fairly stable these days as we see:

https://talkimg.com/images/2023/05/16/blob60064a1520454d0a.png

In terms of volumes, in short, it was a fairly "tame" launch. Reminds me BAKKT launch, hopefully it will have more success than BAKKT.
Anyway it's too early to call.

Today is the record of volumes, almost 70,000 lots, equivalent to 70 BTC. More than double the volume of the first day, the previous record with 31,000 traded shares.

Definetly, the NAV performance is interesting. As you can see, also thanks to the low volatility of the underlying, the NAV has been very much aligned with the price.
Remember that the NAV on day t is calculated on the basis of bitcoin prices on day t-1, so some "misalignment" is possible in periods of high volatility.

https://talkimg.com/images/2023/05/16/blob7bb6be0de592ffde.png

But you see that price and NAV are extremely aligned: considering also the volatility of bitcoin, the variance has always been less than 1%.
I would say an excellent level, especially if we compare this value with the 20% premium recorded on the shares of the GrayScale fund.

From the first day I think we had a clear sign of the main characteristic of this instrument: a share price very closely refletcting the underlying Bitcoin price pattern, without the distrotions implied by the premium over the NAV embedded in GrayScale share price.

Update on the first month of quotation.

https://talkimg.com/images/2023/05/16/blob6e5b65abebe394ed.jpeg

AS we have seen, the price closely match the NAV valuation: the price had a maximum difference of about 3.46%. Just remember GrayScale in this moment has more than 10% premium over the NAV.
Volumes have been quite good, even if in this graph we can discover how much of that volume really became NAV at the end of the day. Wee see that volume has been not great, and actually on July 3rd we had more withdrawal than subscriptions, leading to an outflow from the Asset Under Management.

I think the guys can be satisfied from this month: NAV has been closely tracked, this I think was the first and main objective to achieve. Volumes will follow. Price action in BTC, rather the price NOT action, led to a lack of ideas generating moment that usually lead to investments of this kind.

Do this group need to ask permission from german government? I do not think that the group could easily launched a good project there knowing that most of the government does not allow or prohibited their community to join in cryptocurrency due to the negative news dragging the name of cryptocurrency. Well, if this has been plan then of course this is really a good news to all especially those who had been had already earn their crypto.

Anyway, hoping for the best of the team and the german community. This could be a good start and it may have the chance to integrate other products with cryptocurrency im their place.

Of course they had all the necessary authorisation, you don't get listed on Xetra if your product doesn't tick all the checkmarks.
Please be aware that Germany has actually one of the most advanced legislationsion in Europe regarding cryptos (https://bitcointalk.org/index.php?topic=5205355.msg53205886#msg53205886), so your statement about attitude toward cryptocurrencies are a little bit overstated.

This has turned up on a few investment platforms in the UK and it can be put in a tax free wrapper too. If I had a large amount of fiat I'd give it some thought, but I don't.

Very interesting.
I am not familiar with such wrapper structures. I think something similar exists in Italy, but they require very large amount of fiat and very long investment horizons.
I lack both, I am afraid.

In the UK they're called ISAs - Individual Savings Account.

You can have normal fiat savings in them or you can put stocks in them. Everyone gets an annual allowance to put in, £21,000 ish, and you can transfer previous years into other ISAs and keep whatever gains tax free.

Every financial institution will offer them and there are no rules about periods of time or anything. It's up to whoever issues it.

They've been going for quite a few years now so some people will have built up a substantial amount of tax free money.

This is starting to gather some decent momentum. Last time I checked it had 1000 BTC. Latest figure is 3800.

Volume is well on its way up too - https://www.boerse-frankfurt.de/en/etf/de000a27z304-etc-issuance-gmbh-0-000/price-history/historical-prices-and-volumes

They may well have launched at a very fortuitous time.

Well, I did check the same today and I had a very similar thought.
Really gaining momentum right at the start of the launch might not be really important, as the race is not a sprint, rather than a marathon.
Of course I think anyway having a decent movement in the underlying is halping this fund gather some momentum to keep the steam boiling.
Alos, I still haven't checked, this but given the very high premium in the NAV of Grayscale, also they could be possibly being "stealing" some volume from the biggest fund.
And this is something I would like very much to see, as it means the market are slowly evolving toward a more competitive form.

An image is worth a thousands words:

https://talkimg.com/images/2023/05/16/blob012d679e0f03bce6.jpeg

We see in this image the huge flow the fund experienced during the last bull run.

In this spreadsheet (https://docs.google.com/spreadsheets/d/1o1lA-uF84ujg1CHmfy5_ZkJvzy1RY9lvW-eN1stwXTk/edit?usp=sharing) I computed the BTC held under the fund: as said, there was a massive growth until the present value of more than 3870 BTC:

https://talkimg.com/images/2023/05/16/blob6745384a7316d82e.png

Please note the preium is confirmed to be really low, and the impressive growth of BTC held.

EDIT: corrected an error on the database in the worksheet, updated the graph and added a few computation on the worksheet.

I didn't realise they had a public address but this it is apparently for anyone interested - https://www.blockchain.com/btc/address/35pgGeez3ou6ofrpjt8T7bvC9t6RrUK4p6

It'll be intriguing to see how rapidly it grows. I'm now pondering having a small dabble.

Very nice find! I was actively looking for this address, but I failed to find it. Can you share your source please?
At least it closely resemple my "BTC HELD" graph....

The address is published here https://btc-etc.com/product/#cryptocurrencyetps in the 'structure' section of the technical data tab after clicking 'more'.

This one gives a clearer impression of the growth rate - https://bitinfocharts.com/bitcoin/address/35pgGeez3ou6ofrpjt8T7bvC9t6RrUK4p6

Early days still but impressively rapid. Nearly 2000 BTC added in a week.

Excrement!
Yes, pretty impressive growth. One tought those rate of buying were a prerogative of Square and Grayscale only... well, there is another player here.


Edit: I noticed in the graph the “multisig 2-of-3” part. Quite interesting.

https://talkimg.com/images/2023/05/16/bloba44afb96af3c00d6.jpeg

And now, also the short version is available:

 First Centrally Cleared Short Bitcoin ETP Launched on Deutsche Boerse Xetra (https://www.btctimes.com/news/first-centrally-cleared-short-bitcoin-etp-launched-on-deutsche-boerse-xetra)



Ticker: SBTC - WKN A2781V - Ticker 21XS


Fact Sheet:
https://21shares.com/img/uploads/sbtc-factsheet-july-2020.pdf

Final Terms:
https://21shares.com/img/uploads/sbtc-eu-final-terms.vf31.08.2020.pdf

Very cool. I've always wanted to see an inverse ETF-like instrument for BTC. Unfortunately it rebalances on a daily basis (and also doesn't employ leverage) so it isn't appropriate for swing trading, mainly just for intraday scalping.

I see it's listed on the Deutsche Boerse Xetra, SIX Swiss, and Boerse Stuttgart. Any idea where to find the actual live tickers (not just the fact sheets), with volume and order book info?

I have no clue Sir, but for sure I will be on the case to discover this for you and the other fellow reader.
Rebalancing is, I guess, a common feature of those “fixed leverage” instruments, as they are meant to pay the daily percentual appreciation only.

You can find a good review on many websites:
https://www.morningstar.it/it/etf/snapshot/snapshot.aspx?id=0P0001J2NG

Order book (only first level) you can find those here:
https://www.boerse-stuttgart.de/de-de/produkte/etps/etns/stuttgart/a2781v-21shares-short-bitcoin-sbtc-etp


For depth book level I am afraid you should address your home banking:
https://www.boerse-stuttgart.de/de-de/produkte/etps/etns/stuttgart/a2781v-21shares-short-bitcoin-sbtc-etp/brokerlink

There are many websites: the best one is really down to personal preferences.

If you would ever had the experience with the tax office regarding crypto in Germany, you wouldn't dare to make such a statement :) Seriously, Germany may be ahead of some states in crypto regulation, but there are still so many unclear issues that often make it difficult to handle with crypto. I have friends in Switzerland and Austria where many things are much easier and more regulated than in Germany. That there is an ETP is also nothing special.

Easy or not, I'd be ecstatic to be able to hold for 1+ year and not pay any capital gains tax. Sounds pretty crypto-friendly to me. That's a pipe dream on this side of the Atlantic.

I would be more than ready to wear sock with sandals, learn German grammar and wear short deer trousers in order to being able to avoid any capital gains taxation on my cryptos.
In case, autobahn would be actually a plus.

It is not about easy or difficult, it is about regulations and how well they are done. Right now in my nation there is no regulations, we are so far off than all other nations that our nation doesn't even see it as money so we can do whatever we want without ever worrying about taxes. So, that means am I living in a nation that is easy to use crypto? Obviously I do, I can cash out a million dollars and not pay a single cent and it would still be cool.

However does that mean it is a good thing? Of course not because I am doing this knowing that one day it will be taxed and I am worried how will it be taxed, considering Germany already planned out everything with its regulations, I rather have that over mine. Having regulations that is making it harder is better than having the fear of regulations one day.

Well, if you hold it less than a year you pay your personal income tax on gains what means up to 45%. This in turn is then no longer crypto-friendly. The 1+ year rule is not a crypto specific rule and was just overtaken from non-monetary goods where this tax approach is applied for decades, just as for Gold, Silver and similar assets. If it would be regulated properly, then it should be equated with share profits, on which one pays a lump sum of 25% in Germany no matter how long one holds the shares. This would be really crytpo-friendly.

A little update on the Flows observed By BTCE.
With BTC losing ground, we observed the first outflows from the funds.
Nothing to worry about, but quite a strange coincidence:

https://talkimg.com/images/2023/05/16/blobedc95d058c36fea5.jpeg


On the first graph we can see  the NAV and the fund's price: here we can see that those are closely related, as highlighted on the second graph: the price's premium on the NAV has been consistently below 1%, averaging 0.76% since inception.

We saw that following drop in prices (top graph) we had a fund outflow. It happened on Aug 26th , and also happened on Sep 4th, the last day on the graph (fund flows are made public on the following day).
The thing that  I just discovered is the public address of the fund (https://bitinfocharts.com/bitcoin/address/35pgGeez3ou6ofrpjt8T7bvC9t6RrUK4p6) has still to register this outflow:

https://talkimg.com/images/2023/05/16/blobb4be8d3eb1d2e004.jpeg

We see that on Sep 4th there is no outflow.

This is confirmed on the historic balances:

https://talkimg.com/images/2023/05/16/blobd2eeeca81524150a.jpeg

Actually today it recorded a slight increase in the funds. This is something puzzling me and I am going to investigate about.

The first thing I notice is that the drop I see recorded on Aug 26th is actually mirrored in a Aug 27th outflow in the wallet, so some lag might be involved, but today we are already lagging one day, and we have an increase.

I am going to update the Spreadsheet later today, trying to find an answer to this conundrum.

I finally found a few hours to update the  spreadsheet (https://docs.google.com/spreadsheets/d/1o1lA-uF84ujg1CHmfy5_ZkJvzy1RY9lvW-eN1stwXTk/edit?usp=sharing), fixing a few typos, an error in the computation of the "Cryptocurrency Entitlement" and verifying the information flows from the different  sources.

To monitor the ETP we have three sources:

• the "NAV History" excel linked on the HanETF website
• the public wallet of the ETP
• the information from financial infoproviders.

All three sources should be giving the same results, as the ETP transparency supposedly is a selling point of this product.

These are the results:

https://talkimg.com/images/2023/05/16/blob423a8533944ac6a9.jpeg

As you can see, the information from the fund's distributor is compatible with that observed on the blockchain, at least until August 26th.
From this date on  there are differences that are difficult to reconcile. As you can see this "misalignment" between the two reports, it is not attributable only to the "mismatch" of a few hours with respect to the NAV reporting, probably due to different rules for reporting and for the execution of trades on the Blockchain.

The third source is the one publicly available from financial info providers, and the results are pretty much comparable to the information from the fund. Still, there are a few notable differences (that shouldn't be there)

However, looking at the bright side, I am pleased to notice that the inflows have continued: we are now at almost 5,000 BTC.

I wonder if there are any other bitcoin ETPs or ETFs like BTCE that pose a reasonable alternarive to Grayscale. Specifically, one that is listed on a US exchange for US investors to buy. I can't seem to find any on Google.

---

From which site are you plotting your BTCE trading graphs from? I'd like to try it and see how many indicators I can plot at once. Currently I get my graphs from Tradingview which only lets me plot 3 indicators at once.

There is a limited choice actually.

I answered on my other thread, as I think is more relevant there:
Everything you wanted to know about Grayscale BTC Trust but were afraid to ask! (https://bitcointalk.org/index.php?topic=5256529.msg55174837#msg55174837)

Hope it helps.

Obviously these are just the start, we are going to have a lot more than these, we are going to have a lot of options and people will use them a lot as well because these are a lot more trustworthy to people who are used to traditional markets.

If you see people buying into grayscale but not buying bitcoin directly, that is because it is easier for them, specially for people who are over certain age because they believe it is a long term investment (which they are right) and short term is too volatile for them which means they are already old and they do not want that volatility and if they will ever get into crypto it would be via something like grayscale. When those companies make a profit others will see and they will get into the same thing as well giving us a lot more option.

It is end of Quarter, and it's time to summarise a little bit for our favourite ETP.

The fund price has been tracking the NAV quite closely, and the HELD BTC grew consistently:

https://talkimg.com/images/2023/05/16/blobf5ed99397e6230c7.png

Forget Grayscale average premium of 10%, here we are talking about a less than 1% premium of the price over the NAV: basically a tracking error.

The fund ended the quarter with 5,256 BTC under management.



The only thing that doesn't add up is the public wallet of the fund holding far less BTC than expected:

https://talkimg.com/images/2023/05/16/blob94f1ed77a0c3eed9.png

In the last two days there were a  couple of outflow that aren't justified by fund redemptions.

It might be related to some kind of pee payment for EoQ, but the amount is too different from what I would have expected.

I will try to discover haw those are justified.

I had a tough about this apparent discrepancy betweenwallet fund and shares informations.

There are at least a couple of reasons why this could have happened:

• Someone withdrew their funds from the ETF. The “physical put option”, as they call it (quite confusingly in my opinion), allot investors to take the physical delivery of their bitcoin belt in the ETF. This would result on an outflow from the ETF address and a corresponding drop in the controlled shares. This didn’t happen so it is not probably the cause.
• The wallet manager moved the fund to a different address for whatever reason. Either accounts or security protocol reason could be two of many legit drivers for this.
  It might be in reality the ETF fund is not only a single address but a proper wallet with various addresses.
  Anyway in this case funds are still under ETF control,and shares aren’t decreased.
  This is probably what actually happened, as in a statement, the controller of the fund declared the controlled funds are above fund’s obligations.
  If you check the following link (https://etcm.ltd/resources/Weekly%20Balance%20Report%20-%2001.10.2020.pdf) you will be able to check funds total assets.

Of course these are only educated guesses on what happened. It would be nice to it would be nice to have some information disclosed on both those two facts.

it is almost end of Month, and I want to recap the news about our favourite ETP.

Month has been quite good:

https://talkimg.com/images/2023/05/16/blobb53a455a7f578e89.png

Some decent and above all steady inflow have been observed in the last weeks, in correlation with BTCUSD positive momentum.

According to my numbers, that you can check in the spreadsheet (https://docs.google.com/spreadsheets/d/1o1lA-uF84ujg1CHmfy5_ZkJvzy1RY9lvW-eN1stwXTk/edit?usp=sharing), the funds holds 6,434 BTC, up a neat 22% from the start of the month.


We can check the amounts held in the wallet are greater than the required holding, from APEX, the third part accounting check:

https://talkimg.com/images/2023/05/16/blob9dcfd327275d11f0.png

Check the original document here (https://etcm.ltd/resources/Weekly_Balance_Report_-_29.10.2020.pdf).

Oddly enough, the total number of shares is not consistent with the official number in the hanETF website.

We can see that the official wallet has not yet returned back in line with fund's AUM.

https://talkimg.com/images/2023/05/16/blobae7fb0cb91174bbc.png

Probably the custodian moved the funds away from to the main depositary wallet to another undisclosed cold wallet.

I suspect it would be in fund's better interest to clearly state the list of addresses involved in their custody contract.

Or maybe this is the beginning of their fractional reserve practices. :P

Sort of an odd amount to withdraw to cold storage, no? If I'm reading the data correctly, it's 335 BTC short from an expected 6,366 BTC in the disclosed address. Maybe there was a redemption that hasn't been reflected in the statement of assets yet.

The difference has been present since my last post almost a month ago, and hasn’t been covered since then. So I think it’s not a delay in “recording” an outflow (that should anyway be accounted in the shares before the real transaction in the wallet.

I doubt it s a fraud as the external auditors anyway certified the “correct” amount.

I do agree it’s a weird practise to publicly disclose an address as “reserve”, only to keep it misaligned with official numbers.

Hopefully they are going to disclose the full list of addresses: it’s detrimental to their own image to show such a low level of transparency after having sold that as a feature of the fund.

As "institutional adoption" and "#phase5" have been the name of the game lately, let's look at how BTCP has performed over last month.


As usual, the price has been following the NAV quite closely, but more importantly, inflows have been quite good during the whole month:

https://talkimg.com/images/2023/05/16/blobe7e98388de140a9a.png

Here a numerical detail of the Bitcoin Inflows:

https://talkimg.com/images/2023/05/16/blobdc44fe71f352ed4f.png

The growth is organic and accelerating, I m bullish on this.

The wallet is growing too, all the assets are covered.

https://talkimg.com/images/2023/05/16/blob7c9c18897f99581c.png

I wish they changed their stance on the wallet addresses, they never revealed other wallet's addresses. So there is a little (300 BTC) difference between officially held BTC and the public wallet we know. I think it's a pity, as this kind of transparency is a unique feature of BTCE, while other issuers chose not to disclose the addresses.

Something unexpected happened yesterday: even if grayscale has been churning record after record, eating up Bitcoins like a Blackhole, BTCE experienced their biggest outflow so far.

According to my spreadsheet (https://docs.google.com/spreadsheets/d/1o1lA-uF84ujg1CHmfy5_ZkJvzy1RY9lvW-eN1stwXTk/edit?usp=sharing), they had a 287 Bitcoin outflow yesterday. The biggest to date.

 https://talkimg.com/images/2023/05/16/blob783af40ff165063a.png

Given they have a tad less than 10,000 BTC as Assets Under Management, this is a significant flow to record.

Of course, it is a healthy check to see outflows from time to time, nevertheless, it is curious, as we witnessed a very close resemblance to Grayscale flows lately (namely: inflows only).

Well, there is a 7-8% premium over spot considering NAV. Maybe someone has stumbled onto an avenue to arbitrage that gap.

Meanwhile, GBTC's premium over spot is up at 30%. In October it was at 8%. That really goes to show the level of interest from institutions over the past couple months!

According to my spreadsheet there hasn't neve been a 7-8% premium over the NAV:

https://talkimg.com/images/2023/05/16/blob0334ab6567d2bba7.png

The last data is a spike to 5% and will surely be reabsorbed in the next day(s).
Actually one of the best feature of this ETP is the reduced premium, as often the apparent premium is only due to the lag in the determination of the underlying price compared to the last trade of the fund.

Hmm thanks, maybe I made a mistake trying to account for the forex conversion. It's annoying how shares trade only against EUR but NAV and AUM are calculated in USD. Or I may have calculated using the current intraday spot price when the BTCE market was closed. The historical premium does appear smaller now that I'm looking at the data again.


Why do you think arbitrage is so much more efficient than on GBTC?

That is is the exact reason why I keep doing spreadsheet. Data do not lie, but it is often difficult not to get lost.

Thi premium mechanism is hardwired in the GBTC success. Main clients of GBTC are the “whales” that bus shares in the primary markets only to cash in the premium after six months.
BTCE I think is more focused to “retail” investors, or at least they do not differentiate them so harshly.

As I did suspect it was only a brief blip in the data.
Actually, the jump in the premium was due to a "negative feature" of my spreadsheet, considering the most recent market price, but dragging last available NAV when today NAV is not available yet, so in case of large movement, the NAV is lagging the MArket Price.

	https://talkimg.com/images/2023/05/16/blob4b47d66619f0ee88.png
	Premium is always aligned with NAV, irrespective of market direction.

Regarding to Flows we notice that the outflow registered on Dec 11th  has been cancelled out by bigger subsequent inflows.

	https://talkimg.com/images/2023/05/16/blobe29f17df0790c2ef.png
	AUM in BTC has an organic growth, healthy outflows have been quickly recovered.

I take it BTCE has a redemption mechanism, so share holders can redeem shares either for the underlying BTC or cash equivalent? This should keep the market relatively pegged to spot.

I had actually forgotten, that's the thing about GBTC: investors can't redeem shares. They can only buy in private placement at NAV or sell on the open market, so nobody can efficiently arbitrage the market on the back end the way an ETF typically would be. That's why the premium gets so high.

I honestly thought by now that some institutional traders would be buying in private placement and shorting GBTC to close the gap (free money, right?). But the high premium sustaining probably indicates massive demand for BTC exposure in an equities market with very few options to access it.

I've never invested in any German stocks or ETFs and I wonder what would be the tax implications of buying and selling btce. As a foreign investor when I realize any profits, will I have to pay any capital gain tax?

I tried to google German tax law, it's clear that dividends are entitled to 25% withholding tax but I cannot find relevant info whether foreign investors are liable to capital gain tax? If anyone can shed some lights it all be great! I'm very interested in this product but I haven't bought it because I don't know if I'll be taxed!

If you live in one of the European Countries where this product is passported (List is in OP, but please doublecheck with HanEft Website) you should be able to trade this ETC like any other product, with your home-country fiscal regime.
Otherwise it could be more complicated, with difference not only in taxation, but also in access to this product (like in the UK, for example, where you have to be an institutional investor to buy the shares).

Thanks! I live in Asia and I usually don't have to be worried about capital gain tax investing in like the US market. Just not sure how Germany taxes non European investors...

I think it really depends on the mutual fiscal agreements between your country and Germany. I have the suspect you shouldn’t worry about that, as you mentioned the fact you can buy US stocks without problems.
Problems usually arise with dividend-paying stocks, but this is not the case.

As usual, this is not financial advice, and you should always check the above statement with a local accountant and/or your bank.

The FT suddenly awakens and publishes an article about the BTCE being quite successful over the last days of the past year:


Bitcoin securities trading surges as investors seek crypto exposure (https://www.ft.com/content/fb8ac343-6574-4aa0-8f47-c2c9e9d57541)



The volume growth seems impressive, actually:

https://talkimg.com/images/2023/05/16/blob10ab03793835b0cd.png


Well, we might have something to discover about this.
First, a brief recognition of what has happened; the price has rallied, but as per the prospectus, the premium over the NAV has been tiny all along the ride. The maximum discrepancies have been in the region of 5% maximum

	https://talkimg.com/images/2023/05/16/bloba8c79afc2ab3b385.png	https://talkimg.com/images/2023/05/16/blob0517be47b283a250.png
	Graph 1. Mid Market Value and NAV have been almost indistinguishable, while BTC held kept rising due to constant inflow.	Graph 2. Apart form some temporary hiccup, the Premium over the NAV has been barely noticeable 2

I obtained some similar graph from Bloomberg Professional, and they basically confirm my calculations:

	https://talkimg.com/images/2023/05/16/blobc198822e61ac9873.jpeg	https://talkimg.com/images/2023/05/16/blob740a01ec5eeb038a.jpeg
	Graph 3. Market Price and Volumes, with a Moving Average outlining the growth in Trading Volumes	Graph 4. In the upper Graph, the premium of the NAV: we see it quite consistently low, apart from overshoot immediately reabsorbed. In the lower Graph we can see the inflows. We see a huge inflows in Jauary. Please note that those values are in USD.

As those graphs are in USD, it would be nice to see how these are morphed when we look at those in BTC, this allows us to look at those inflows without accounting for the rise in BTC price over the last months:

https://talkimg.com/images/2023/05/16/blobb46313b4abbc1ab8.png

Here we see the same graph of in/outflows we saw on the lower part of Graph 4. You see the information are the same, but the latest inflows are not "stretched" by the market explosion.

BTCE had a few good days:

	https://talkimg.com/images/2023/05/16/blob44a9d655a54e02bf.png
	Subsciption have accelerated during last days

BTCE had a few good weeks in 2021, with the last two weeks setting new inflows records.
This is particularly relevant as their main competitor GBTC, has been quite struggling.

Also, they have been tracking the NAV fairly accurately.

	https://talkimg.com/images/2023/05/16/blobb85b517a6ad5389b.png
	BTCE hasn't never diverged their NAV and market price

It's nice to see at least in Europe there is some serious ETP competitor to Grayscale!

On Hansetf Website they added a couple of interesting documents.

The first one is the BTCE Product Deck (https://www.hanetf.com/UsersFiles/HanETF/Documents/644/BTCE-Product-Deck.pdf):

https://talkimg.com/images/2023/05/16/blobd16e512b2832ba81.png (https://www.hanetf.com/UsersFiles/HanETF/Documents/644/BTCE-Product-Deck.pdf)

A nice read with a brief Bitcoin overview ("Bitcoin101"), an investment case and information about this particular product.

https://talkimg.com/images/2023/05/16/blob14fe13a38aa6102e.png

The second documents is a brief description on how a ETP is different from a Trust and a Future.
https://talkimg.com/images/2023/05/16/blob8bfb5a5b8ea07e07.jpeg (https://www.hanetf.com/UsersFiles/HanETF/Documents/738/BTCE-Essential-Guide-to-Buying-Bitcoin8062.pdf)

Both resources are quite useful: added to OP.

A quick update on the BTCE.

The fund is flourishing, and they are having a very good performance.

First of all, they are tracking the BTC without any hassle, the premium is tiny and the amount of BTC in AUM is constantly growing:


https://talkimg.com/images/2023/05/16/blob1b42ad83ebecc167.png

You can barely notice the NAV and MID lines spreading apart, as the premium is virtually non-existent (hear that, GBTC?).

Flowwise, we had a few busy days there:

https://talkimg.com/images/2023/05/16/blobdaecb120aaf1dbe0.png

Recently we had a very big outflow, that was quickly recovered in the following days.

Some investor decided to cash out, apparently.
Luckily the net amount of BTC in the fund was quickly recovered as there were massive incoming flows in the following days.

This is not an error in my chart, as also Bloomberg had a very similar graph:

https://talkimg.com/images/2023/05/16/blobd0534db7b25d682c.png

There you can see in the first panel the NAVV and the mid, in the middle panel there is a graph of the premium, that has always been in the +5%, -4% range, with an average premium of just 0.6%.

In the lower panel, you see the daily inflows. There you can notice the same outflow on March, 5th.

The weird thing is that on the same date, nothing was registered on the blockchain, at the known address of BTCE:

https://talkimg.com/images/2023/05/16/blob1027fcf8836ba3b0.png

Here above a zoom of the public address. there are no outflows.

The only explanation is that they have other undisclosed addresses where they store their funds, as the total balance of the address is not enough to cover the fund's AUM.


I will try to discover more.

Eurex has decided to launch futures on this ETN.
Eurex is then going to quote something highly resembling a physical bitcoin future, even if there are a few, not negligible, differences.

Eurex to Launch Bitcoin ETN Futures to Meet ‘Significant Demand’ (https://www.coindesk.com/eurex-to-launch-bitcoin-etn-futures-to-meet-significant-demand)


The most important part is the "Significant Demand".
This is going to be interesting.
Also in the next few days, I am going to update the thread's spreadsheet with updated data. 

The initiative will bring Europe's first regulated marketplace for Bitcoin-related financial derivatives.
This setup will allow investors to monitor Bitcoin price movements in a fully regulated, centrally cleared environment based on the transparency of the underlying ETN price.
Crap basically :D
Both ETFs and ETNs are designed to replicate an underlying asset.
When investing in an ETF, the fund holds the asset it tracks. That asset can be stocks, bonds, gold or other commodities or futures contracts while in contrast, an ETN is more like a bond, or an unsecured debt note issued by an institution.
ETNs have a significant advantage over ETFs in that they lack tracking error.
But, as I said, crap's always crap.

Agree.
Let's look at the half-full glass: it's less crap than using other sub-optimal instruments.
For example, an ETF is crap, but surely is less a crappy instrument than buying MSRT or GBTC to gain exposure to BTC!

Since we are here, I just updated the spreadsheet (sorry, I wasn't able to fully automate like others) regarding this fund. I had some surprises:

Firstly the AUM in bitcoin and the flows:

https://talkimg.com/images/2023/05/16/blobb00ce87b28ff0ec6.png

The fund had a maximum of almost 24K bitcoin back in April around the time of the price ATH. Then it corrected a little bit to touch a relative low of 16k BTC, never to recover again, even if the price surged back a little bit.

An important aspect is that market has moved quite  a lot lately, but the tracking error never exceeded 4.4%:
https://talkimg.com/images/2023/05/16/blob715f89283e458781.png.
So I would say the instrument is now in its maturity phase. There is balanced two ways flows in the market, and the NAV-PRICE equivalence has never broken.
This is a very important feature for the investors, who seek reliable, liquid markets.

Hopefully, we will see new improvements in BTC AUM soon.

In fact I can't wait to see what will be the performance here both in terms of adoption and appeal for classic investors (read financial dinosaurs).
Still, I can't see the half-full glass for all the reasons I expressed in your Grayscale thread which I don't want to repeat.
A maybe quarter full glass thought could be the one that these guys needs to cover their arse with the underlying asset which is the real thing.

A little update on this thread.
The spreadsheet is broken after so much time, so I will try to restart it again.
In the meantime we can see how the BTCE portfolio evolved over the last months:

https://i.ibb.co/hM1rBVS/59216333.png

it interesting that the number of Bitcoins held in the fund is closely following the steepness of the contango.
As the contango steepens the number of Bitcoin held grows, while when the contango is flatter the number of bitcoins decreases.

This hints at the usage of this ETP as a leg in the cash and carry trade.
If the contango grows positive, then speculators will try to sell the futures and buy the spot.
Buying the spot means that they will buy this ETP, hence  the amount of BTC held in BTCe Walle will grow.
But doing so, they will also make the curve flatter.
When the curve flat enough, they will close the position and wait for it to become steep again, as keeping the position open has a cost. Closing the position they will end up selling the spot leg of the trade.

Bumping this thread as something new happened.

Speaking of Depegs, the BTCE fund just depegged from it’s intrinsic value.
I define intrinsic value as the value of the Bitcoin embedded in each share of the fund, determined as


At the moment the BTCE is traded on the market at 19.35 EUR mid, bt with a bitcoin price of 22,250USD,  entitlements of 0.000945735 and an FX rate of 1.0678we get a value of


This means that theoretically you could buy the BTCE, sell an equal amount of bitcoin, and then ask the BTCE issuers or Market makers to convert your shares in an equal amount of physical bitcoins, pocketing 35 cents - fees per share.

A lot of details and frictions to be ironed out here, but the concept is simple.

More information on the conversion process is here:
Redemption Information Document (https://etc-group.com/resources/information_sheet/etc_issuance_gmbh_redemption_information_document.pdf)