Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!

[Daltonik]

Just spice up the topic a bit, quiet here. Many probably also receive press releases from Grayscale by mail, the last of them was a newsletter about a letter from lawyers from Davis Polk to the pending GBTC 19b-4 application.

The main points that Grayscale focuses on:
-The SEC is already able to approve spot bitcoin ETFs based on its previous approval of bitcoin futures ETFs, since, according to lawyers, the spot and Bitcoin futures markets are inextricably linked.
-The SEC, as a regulatory body, should continue to consistently and fairly provide issuers with feedback or recommendations, rather than choosing winners and losers by acting biased.
-The SEC cannot impose an additional, new requirement on Bitcoin spot ETP or on other Bitcoin spot ETP, such as a Trust Fund, whose applications under Rule 19b-4 were
 previously rejected as this would be unfair discrimination between issuers, in violation of the mandate of Section 6(b)(5) and the Administrative Procedure Act.

https://grayscale.com/wp-content/uploads/2023/07/97062447v22-Grayscale-Comment-Letter-7.27.2023.pdf

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[franky1]

alot of SEC bigheads dont like "trusts" as being a fund trading vessel and prefer a LLC or a corp. it is because there is no human owner of a trust(as thts their point).  thus hard to litigate against anyone if things go wrong.

trusts operate by paper rule(contract and policy) of an organisation. not by a CEO. and so if things turn bad the SEC would like to have some human they can point to to answer for the actions.

however trying to prevent a bitcoin ETF via some recent "we dont like trusts" is a bit late because hundreds of fiat held ETF's are already set up using trusts.

..
as for previous poster trying to suggest that legally if a futures ETF is accepted then a spot ETF should be default accepted. is weak. .. though arguments of if a futures TRUST was accepted then that moots the point of a spot TRUST disagreement. there are other factors at play that make futures ETF different then spot ETF and its these differences that need to be considered

 

[fillippone]

In the meantime, the discount of share price to NAV has somewhat tightened to sub 25%, only to marginally widen again to the current level of 25.8%.



This is, notwithstanding the supposed “SEC disappointment” when it comes to ETF approval, the best indicator of how market participants are betting on approval (with an immediate effect of GBTC conversion).

[fillippone]

Breaking news.




This doesn't imply an immediate GBTC conversion to an ETF, but for sure it put some pressure on the SEC, which has a flurry of deadlines in these days.

In the market GBTC skyrocketed to a 15% discount.

[dragonvslinux]

In the market GBTC skyrocketed to a 15% discount.

Discount still around 25% unless mistaken? Currently $BTC around $27.5K and $GBTC around $20.5K (27.5 x 0.75 = 20.63)

It is up around 15%+ today though as of writing.

[fillippone]

In the market GBTC skyrocketed to a 15% discount.

Discount still around 25% unless mistaken? Currently $BTC around $27.5K and $GBTC around $20.5K (27.5 x 0.75 = 20.63)

It is up around 15%+ today though as of writing.

It doesn't work exactly like that.
It's very volatile right now, but on a back of the envelop basis:

at 10:52 NYT
BTC: 27,400 USD
GBTC: 20.50 USD
ENTITLEMENT: 0.00090094 BTC (as of yesterday, no time to adjust that).

So every GBTC share contains 0.00090094 BTC, so it is worth 0.00090094*27,400 USD=24.69 USD.
Market Price is 20.50 USD, so the discount is 17% at that time.

[dragonvslinux]

In the market GBTC skyrocketed to a 15% discount.

Discount still around 25% unless mistaken? Currently $BTC around $27.5K and $GBTC around $20.5K (27.5 x 0.75 = 20.63)

It is up around 15%+ today though as of writing.

It doesn't work exactly like that.
It's very volatile right now, but on a back of the envelop basis:

at 10:52 NYT
BTC: 27,400 USD
GBTC: 20.50 USD
ENTITLEMENT: 0.00090094 BTC (as of yesterday, no time to adjust that).

So every GBTC share contains 0.00090094 BTC, so it is worth 0.00090094*27,400 USD=24.69 USD.
Market Price is 20.50 USD, so the discount is 17% at that time.

Ah yes thanks for explaining, forgot it's about the number Bitcoin's in the trust vs number of shares...

Makes me think the 17% discount could evaporate sooner than later.

[fillippone]

In the market GBTC skyrocketed to a 15% discount.

Discount still around 25% unless mistaken? Currently $BTC around $27.5K and $GBTC around $20.5K (27.5 x 0.75 = 20.63)

It is up around 15%+ today though as of writing.

It doesn't work exactly like that.
It's very volatile right now, but on a back of the envelop basis:

at 10:52 NYT
BTC: 27,400 USD
GBTC: 20.50 USD
ENTITLEMENT: 0.00090094 BTC (as of yesterday, no time to adjust that).

So every GBTC share contains 0.00090094 BTC, so it is worth 0.00090094*27,400 USD=24.69 USD.
Market Price is 20.50 USD, so the discount is 17% at that time.

Ah yes thanks for explaining, forgot it's about the number Bitcoin's in the trust vs number of shares...

Makes me think the 17% discount could evaporate sooner than later.

The discount is at the minimum levels of last year.
It could evaporate only on ETF conversion, otherwise I see a little discount as possible.
Definitely one of the best trades I have been advising was being long GBTC vs MSTR, which performed decently in this scenario even if ma Microstrategy was more resilient than I thought.

[dragonvslinux]

In the market GBTC skyrocketed to a 15% discount.

Discount still around 25% unless mistaken? Currently $BTC around $27.5K and $GBTC around $20.5K (27.5 x 0.75 = 20.63)

It is up around 15%+ today though as of writing.

It doesn't work exactly like that.
It's very volatile right now, but on a back of the envelop basis:

at 10:52 NYT
BTC: 27,400 USD
GBTC: 20.50 USD
ENTITLEMENT: 0.00090094 BTC (as of yesterday, no time to adjust that).

So every GBTC share contains 0.00090094 BTC, so it is worth 0.00090094*27,400 USD=24.69 USD.
Market Price is 20.50 USD, so the discount is 17% at that time.

Ah yes thanks for explaining, forgot it's about the number Bitcoin's in the trust vs number of shares...

Makes me think the 17% discount could evaporate sooner than later.

The discount is at the minimum levels of last year.

It's less than that even. Yesterday was 18% and last year lowest was 20% based on this caluclation.

It could evaporate only on ETF conversion, otherwise I see a little discount as possible.

It could still evaporate before based on an ETF approval. Bare in mind that there was a considerable premium for many years, usually between 10-40%, probably an average of 15-20% on average, so clearly isn't always rational. However based on how long there has been a discount for, over 2 years now, then generally agree it's unlikely to return to parity or become a premium again (if ever) until after ETF launch.

I otherwise assume that an ETF for GBTC would stabilise the premium/discount ratio, as arbitrage would keep it close to 0, but maybe this isn't how it works...

Definitely one of the best trades I have been advising was being long GBTC vs MSTR, which performed decently in this scenario even if ma Microstrategy was more resilient than I thought.

Is this since the start of the year or something? I just checked the ratio between the two and MSTR has performed just as well as GBTC. Otherwise since 2020 MSTR has still performed better than both GBTC and BTC. The discount evaporating for GBTC would certainly give it an edge though over MSTR though. GBTC has so far been a better investment than BTC this year, with +30% on top of BTC's gain.

[franky1]

grayscale CEO interview today
yahoo: https://www.youtube.com/watch?v=lH0zQMRAGLs
cnbc: https://www.youtube.com/watch?v=XRMimIPbbyw
bloomberg: https://www.youtube.com/watch?v=lYHRMOdg6A0

he says similar stuff in all, but more detail in the yahoo/cnbc version(i ordered the list in most interesting first)

highlights:
SEC has 45days to appeal
grayscale will during that period be in contact with SEC to resolve issues, hope to push ETF forward
court will release final mandate of operational next steps grayscale and SEC should follow

[fillippone]

No shit Sherlock,
Market is manipulated?

Whales bought $388M of Bitcoin just before the Grayscale-SEC news

“Whales & sharks may have known a thing or two about the outcome of the #Grayscale and #SEC lawsuit, with 10-10K $BTC wallets accumulating a collective $388.3M in $BTC the day leading up to the news. They were handsomely rewarded with a +6% price jump,” Santiment posted on X.

I would also expect whales to do their own shit, but it actually would surprise me if they had insiders on this. But I am just a simple guy.

[dragonvslinux]

SEC has 45days to appeal

So what happens if they don't appeal after 45 days. Hypothetically? Has there been a date set for make another decision for example? Haven't heard anything other than speculation.

In other news for anyone had wasn't aware, the SEC has got some big decisions to make in coming days, which could indirectly affect the Greyscale discount further:

Investment firm Bitwise will learn if its ETF will win the SEC’s approval on Sept. 1 while BlackRock, VanEck, Fidelity, Invesco and Wisdomtree will all be awaiting the SEC’s decision for their funds by Sept. 2, according to several SEC filings.

Meanwhile, Valkyrie is set to hear back from the SEC on Sept. 4.

Gonna go ahead and guess they also rejected these as well, as the recent decision won't have changed their mind in the last few days.

Either that or a moonshot in on the horizon and Greyscale will get their ETF conversion approval sooner than later.

Also: Spot Bitcoin ETF Approval Odds Rise to 75% (Bloomberg)

Seems like people think ETFs are actually going to happen in very near future. I remain sceptical though, maybe just cos it's been 10 years of in the making.

[franky1]

SEC has 45days to appeal

So what happens if they don't appeal after 45 days. Hypothetically? Has there been a date set for make another decision for example? Haven't heard anything other than speculation.

usually SEC has to accept or decline applications with certain deadlines and there are usually 3-4 deadlines..
the court will offer final guidance on the next steps, which for grayscale will be any alterations that could aid the filing. and for the SEC a deadline to investigate and accept/decline(decide)

but for the SEC they will have to have a really good lawful reason to decline as i believe the court will tell the SEC the only lawful reasons the SEC could decline at the new deadline yet to be set

if the court do define lawful reasons the SEC could decline. this information can also be useful for grayscale and any ETF applier so they know which holes to avoid

[odolvlobo]

No shit Sherlock,
Market is manipulated?

Whales bought $388M of Bitcoin just before the Grayscale-SEC news

“Whales & sharks may have known a thing or two about the outcome of the #Grayscale and #SEC lawsuit, with 10-10K $BTC wallets accumulating a collective $388.3M in $BTC the day leading up to the news. They were handsomely rewarded with a +6% price jump,” Santiment posted on X.

I would also expect whales to do their own shit, but it actually would surprise me if they had insiders on this. But I am just a simple guy.

More conspiracy nonsense. Saying that changing amounts of BTC at an address indicates buying or selling is a stretch, especially when it isn't a specific address but all addresses holding a range bitcoins.

People may be whales, but addresses with large amounts of BTC are not. Addresses are not people.

Furthermore, that article also says this:

Was there a hint of manipulation here? Earlier, Santiment had retweeted (re-X’d) analyst Ali Martinez’ highlight of the fact that 30k BTC was sent to exchanges just before the Grayscale victory news.

Sending BTC to an exchange indicates the intention to sell. So, while some hypothetical whales may have been buying BTC just before the announcement, actual whales were intending to sell.

Furthermore, the article implies that the purpose of the movement of BTC to the exchanges was to manipulate the price, and yet the graph shows that it had absolutely no effect on the price. So, no manipulation.

Now, I'm not saying that there is no manipulation of any kind. I just think that spreading and promoting dubious evidence actually hurts the case against manipulation. It's both crying wolf and chicken little.

[Daltonik]

Against the background of a court decision favorable to Grayscale, the founder and partner of Pomp Investments Anthony Pompliano and former SEC chair Jay Clayton expressed their opinion. And they completely coincide in the assessment that SEC approval of a spot ETF is not only likely, but also inevitable.

CNBC Television: https://www.youtube.com/watch?v=Zf0iSEK-RDI
                         https://www.youtube.com/watch?v=WudbiBkZBC0

[fillippone]

Sending BTC to an exchange indicates the intention to sell. So, while some hypothetical whales may have been buying BTC just before the announcement, actual whales were intending to sell.

Let imagination run wild, sending BTC to an exchange might actually mean using those coins as a collateral for long positions.
Not sure if this is the case, but only an example of a dubious interpretation of facts.

[franky1]

i know its old news now.. but something i forgot to highlight about DCG

https://web.archive.org/web/20221004205949/https://dcg.co/portfolio/#f oct 04th 2022
https://web.archive.org/web/20221022144405/https://dcg.co/portfolio/#f oct 22nd 2022
https://web.archive.org/web/20221117094013/https://dcg.co/portfolio/#f nov 17th 2022
https://web.archive.org/web/20221122132601/https://dcg.co/portfolio/#f nov 22nd 2022

scroll to the last listing of companies beginning with F
notice something??  [FTX]

with SBF's case next month where the courts would want to claw back losses from parties involved with it.. we may see some affects on DCG which can impact grayscale

its said DCG paid a settlement to the FTX administrators of $175m via genesis with a deal to not pursue genesis any further legally. but i believe DCG had more FTX exposure via other sister companies of the DCG umbrella

edit
just found this
https://grayscalelitigation.com/

yep seems grayscale has direct exposure to the FTX contagion totally separate to the genesis drama

[fillippone]

Grayscale wrote to the SEC urging them to approve an ETF conversion of GBTC:

Re: Grayscale Bitcoin Trust

But now that the Court of Appeals has spoken, there is no available rationale that would distinguish a bitcoin futures ETP from a spot bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot bitcoin ETPs. This is because, as the Commission has consistently explained:
[A]n exchange that lists bitcoin-based ETPs can meet its obligations under Exchange Act Section 6(b)(5) by demonstrating that the exchange has a comprehensive surveillance-sharing agreement with a regulated market of significant size related to the underlying or reference bitcoin assets.7

The request appears legitimate to me, thus giving the SED some leeway for an orderly exit from this Mexican standoff.

 

[Daltonik]

Maybe someone has already seen the message that Arkham platforms managed to link more than 1,750 bitcoin addresses with Grayscale Bitcoin Trust, in total there are 627,779 BTC worth about $16.28 billion, in any case, analysts say so.
If this is true, then you can track the addresses here https://platform.arkhamintelligence.com/explorer/entity/grayscale

Source:
https://cointelegraph.com/news/grayscale-bitcoin-trust-alleged-wallet-addresses-released-arkham
https://twitter.com/ArkhamIntel/status/1699461141066359180

[bbc.reporter]

@fillippone. With speculations that bitcoin ETF approval is near, it might be good to update the thread weekly on how much GBTC's discount or premium on net asset value. I reckon this will be a good indicator to use if Barry's insiders think ETF approval is getting closer.

It does not need to be the approval of Grayscale's ETF, I reckon it will be any ETF because the approval of 1 will be the approval of much of them.