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

[BelindaYork]

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

[1714828653]

1714828653

[1714828653]

1714828653

[1714828653]

1714828653

[fillippone]

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

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!

[fillippone]

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?

[fillippone]

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.

[calaber34p]

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.

[BelindaYork]

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.

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

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!

[calaber34p]

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

[fillippone]

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.

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.

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.

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.

[calaber34p]

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.

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.

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.

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.

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.

[fillippone]

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.

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!

[fillippone]

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

Guggenheim's $5 billion Macro Opportunities Fund wants Bitcoin exposure.

On Friday they filed an SEC amendment allowing them to invest up to 10% of their fund in $GBTC.

A 10% investment would be worth $487M, and would be $200M+ larger than their next largest position.

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)

[Karartma1]

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  

[fillippone]

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

11/30/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.

Total AUM: $12.2 billion

$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $XRP $ZEC

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.

[DooMAD]

This is fucking ridiculous: look at the premiums!

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?

[fillippone]

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!

[MusaMohamed]

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.

[Karartma1]

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!

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.

[fillippone]

<…>
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.

Are you kidding me? Many ETP’s (general definition for Exchange Traded Products) have a 0.25% fee. Some have a 0% fee. 0.50% fees means there is a special feature on those.
Also do you know how much is it 2% yearly? If you buy a single bitcoin in GBTC after 5 years of holding you are left with 0.904 BTC.
I don’t like that.

[vapourminer]

ok so i just saw a grayscale commercial on tv, maybe an old one as i dont watch much tv really. it was the one where everyone is schlepping around gold bars and dropping it and such.

one thing that struck me as odd is they said something like "unlike gold bitcoin has actual utility." gold, being a noble metal, does have some utility as its good in electronics, most good connectors (like in audio, electronics slots, plugs and such) as its corrosion resistant and lowish resistance etc.

now its a very small percentage thats used for its actual physical properties as opposed to just storing it in bar/coin form or admiring how shiny it is in jewelry etc. so i supposed thats just a slight exaggeration but still.. kinda bugged me.

gold: exchange of value, storage of value, physical utility (small percentage)
btc:  exchange of value, storage of value.

maybe im too picky..

edit: for those who dont know me, im more btc vs gold myself of course. but both are handy to have for various reasons.

[fillippone]

ok so i just saw a grayscale commercial on tv, maybe an old one as i dont watch much tv really. it was the one where everyone is schlepping around gold bars and dropping it and such.

one thing that struck me as odd is they said something like "unlike gold bitcoin has actual utility." gold, being a noble metal, does have some utility as its good in electronics, most good connectors (like in audio, electronics slots, plugs and such) as its corrosion resistant and lowish resistance etc.

now its a very small percentage thats used for its actual physical properties as opposed to just storing it in bar/coin form or admiring how shiny it is in jewelry etc. so i supposed thats just a slight exaggeration but still.. kinda bugged me.

gold: exchange of value, storage of value, physical utility (small percentage)
btc:  exchange of value, storage of value.

maybe im too picky..

edit: for those who dont know me, im more btc vs gold myself of course. but both are handy to have for various reasons.

This is the commercial, I think:



https://youtu.be/_BIDcmh_6Es

It payload is :”Drop Gold”
Bitcoin, as digital gold, do what gold does, but in a better way.

Of course the spot exaggerates the benefits of bitcoin over Gold (an heavy and not so mobile metal, difficult to store), without mentioning any eventual drawback ( hints :10 years of successful story, versus millennial successful story).

Of course gold has utility and industrial value, but this is a very tiny percentage of the commercial value, which is dominated by the financial value due to scarcity.
 Otherwise other metals, way more useful, but more common, like silver or palladium, would have surged as store of value.

On the other hand, what has more utility: a gold plated stereo jack, or the possibility to to send trustlessy and in an un-censorsble way money on the other side of the planet? (I.e: using bitcoin without SoV properties)