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

[fillippone]

According to @Ericbalchunas, Grayscale Investments has applied to launch an ETF called Grayscale Future of Finance, its composition will be formed by shares of blockchain-related companies. The instrument will receive the GFOF (Grayscale Future of Finance ETF) ticker.
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Meh.
So what? Yet another subpar way to get exposure to bitcoin for those who cannot touch neither physical bitcoin (1st choice), nor exchange traded derivatives, as CME futures (2nd choice), nor even tailored, derived products (Bitcoin tracker).

Definitely, not interesting, at least for the investors who have access to higher order bitcoin investments

[Daltonik]

AUM Digital asset management at Grayscale exceeded $60 billion (currently $58.34 billion) on November 11, surpassing the AUM ($58.292 billion) of gold shares of SPDR, the largest and most liquid gold ETF in the world.
https://decrypt.co/85798/crypto-firm-grayscale-hits-60-billion-overtaking-top-gold-etf

 

 

[fillippone]

AUM Digital asset management at Grayscale exceeded $60 billion (currently $58.34 billion) on November 11, surpassing the AUM ($58.292 billion) of gold shares of SPDR, the largest and most liquid gold ETF in the world.
 

As always this is due only to the growth in Bitcoin Price.
There is no new flow into the trust, as the primary market has been long closed, and there is no interest in buying shares on the secondary market, even I at discount to the NAV.

I would think there is a selling interest to shift to ETF, but I have no data to support my claims.
 Generally speaking, I guess  "traditional" bitcoin funds have seen an outflow since the inception of the bitcoin ETF, so I think the same happened to GBTC, even if I haven't data to support my claim.

[Daltonik]

I would think there is a selling interest to shift to ETF, but I have no data to support my claims.
 Generally speaking, I guess  "traditional" bitcoin funds have seen an outflow since the inception of the bitcoin ETF, so I think the same happened to GBTC, even if I haven't data to support my claim.

You are probably right that there is an outflow, but how to look at the dynamics is not entirely clear, there is current data, but there is no data on overflow, it would be interesting to visually see this whole process. It can be seen that public traders own about 0.96% of BTC, while bitcoin ETFs have 4.11$ BTC https://www.coinglass.com/BitcoinTreasuries

[fillippone]

Things are continuing not to go well for Grayscale.
Price continues to be at heavy discount to NAV.
And new ETF?s coming to trade, surely do not help the scenario:



On a side note, as per my spreadsheet BTC in AUM decreased from f655,605 when they locked new shares back in March, to 646,404 help yesterday. These 9,000 BTC went straight into GBTC pockets as management fees, for basically doing... nothing.

Any guess why people are selling shares to buy a future backed ETF at a 0.95% fee.

More on this later, as I am not sure this could be a good trade.

[DaRude]

Things are continuing not to go well for Grayscale.
Price continues to be at heavy discount to NAV.
And new ETF?s coming to trade, surely do not help the scenario:



On a side note, as per my spreadsheet BTC in AUM decreased from f655,605 when they locked new shares back in March, to 646,404 help yesterday. These 9,000 BTC went straight into GBTC pockets as management fees, for basically doing... nothing.

Any guess why people are selling shares to buy a future backed ETF at a 0.95% fee.

More on this later, as I am not sure this could be a good trade.

Well their highest BTC holding looks to be 655.753 on 25/2/21 at 2% yearly fees that's BTC13.115,06/yr in fees or BTC35,9/day every single day of the year they collect almost 40BTC on a closed fund that no one can leave. Quiet ingenious on their parts if you ask me. If my math is right, if nothing changes in just 19yrs (2040) they'll collect more in fees than global supply of BTC mined!  

yr	reward BTC/day
2020	900
2024	450
2028	225
2032	112,5
2036	56,25
2040	28,125

[fillippone]

Things are continuing not to go well for Grayscale.
Price continues to be at heavy discount to NAV.
And new ETF?s coming to trade, surely do not help the scenario:



On a side note, as per my spreadsheet BTC in AUM decreased from f655,605 when they locked new shares back in March, to 646,404 help yesterday. These 9,000 BTC went straight into GBTC pockets as management fees, for basically doing... nothing.

Any guess why people are selling shares to buy a future backed ETF at a 0.95% fee.

More on this later, as I am not sure this could be a good trade.

Well their highest BTC holding looks to be 655.753 on 25/2/21 at 2% yearly fees that's BTC13.115,06/yr in fees or BTC35,9/day every single day of the year they collect almost 40BTC on a closed fund that no one can leave. Quiet ingenious on their parts if you ask me. If my math is right, if nothing changes in just 19yrs (2040) they'll collect more in fees than global supply of BTC mined! 

yr	reward BTC/day
2020	900
2024	450
2028	225
2032	112,5
2036	56,25
2040	28,125

This is my math:



Out Maths coincide, but basically you forgot to take into account that the fees decrease 2% each year for... the fees themselves.
Given the next halving at March 26, 2024, I see the overtake at the following halving: 26/03/2044

[Daltonik]

An article in Morningstar devoted to the problems of Grayscale Bitcoin Trust, according to the author, the structure of trust leads to constant deviations between the market price that investors pay for shares and the NAV of these shares, and is it possible to avoid this after converting Bitcoin Trust in shades of gray into an ETF.

Ideally, according to the author, the number of shares outstanding for a closed fund should correspond to the level of demand for these shares. This would keep the trust's share price in line with its total NAV. However, the object capable of creating and removing stocks from the market is Grayscale itself. This is done through private placements and repayments, which are available only to accredited investors on a periodic basis at the discretion of the firm. This process is not as smooth as the ETF creation/redemption mechanism, and can lead to periods when too many stocks are available on the market or vice versa, there are too few of them.
As the author notes, while waiting for the approval of the ETF, many investors most of all hope that Grayscale will introduce a buyback program. His inability to do so so far explains the trust's current dilemma, although the firm may not want to use this tool until there is more clarity around the spot ETF.

https://www.morningstar.com/articles/1068472/the-problems-with-the-worlds-biggest-bitcoin-fund

[Daltonik]

According to documents filed with the SEC, Morgan Stanley bank disclosed some of its funds that added bitcoin to Q3.
So, at the end of September, the Morgan Stanley Growth Portfolio Fund added almost 1.512 million shares of Grayscale Bitcoin Trust (GBTC), and Insight Fund also added 592,498 shares during this period.
https://www.sec.gov/edgar/search/#/q=bitcoin&dateRange=custom&entityName=Morgan&startdt=2021-11-23&enddt=2021-11-23

[Daltonik]

Grayscale Investments in the report concluded that the annual income of the Web 3.0 metaverse sector could reach $1 trillion in the near future. The sphere will challenge Web 2.0 companies with a total capitalization of $15 trillion.David Grider and Matt Maximo emphasized that metaverse platforms integrated with cryptocurrencies, DeFi, NFT services, decentralized management and cloud storage have created "new online opportunities" that attract users.

According to analysts, since 2020, the number of active wallets in the metaverse has increased 10-fold and approached the 50,000 mark in June 2021. https://grayscale.com/wp-content/uploads/2021/11/Grayscale_Metaverse_Report_Nov2021.pdf

[fillippone]

According to documents filed with the SEC, Morgan Stanley bank disclosed some of its funds that added bitcoin to Q3.
So, at the end of September, the Morgan Stanley Growth Portfolio Fund added almost 1.512 million shares of Grayscale Bitcoin Trust (GBTC), and Insight Fund also added 592,498 shares during this period.
https://www.sec.gov/edgar/search/#/q=bitcoin&dateRange=custom&entityName=Morgan&startdt=2021-11-23&enddt=2021-11-23

On one hand I hope that MS is such a sophisticated investor that is doing a cash and carry trade, selling the future versus buying the bitcoin spot, or rather the discounted version of it: the GBTC. IT is a 10% delta neutral trade (delta neutral means non-directional), subject to an immediate upgrade in case of a GBTC conversion into an ETF.
On the other hand, I am afraid they are only putting a directional play in place. Only buying a "cheap bitcoin exposure" via GBTC.
Sad!

[Daltonik]

Grayscale Investments has announced the launch of a trust to invest in the native token of the Solana network. To determine the daily value of an asset, the trust uses the coinDesk Solana price index (SLX). The annual commission for using the service will be 2.5%.
https://www.globenewswire.com/news-release/2021/11/30/2343063/0/en/Grayscale-Investments-Launches-Grayscale-Solana-Trust.html?linkId=142341725
https://grayscale.com/products/grayscale-solana-trust/?utm_source=globe-newswire&utm_medium=pr&utm_campaign=product-sol&utm_content=2021-11-30_product-launch-sol&utm_term=SOL

[fillippone]

Grayscale Investments has announced the launch of a trust to invest in the native token of the Solana network.

Yet another step in the wrong direction.
I cannot understand their strategy about this whole situation.
What is the point of launching a new, doubtful fund, when your flagship is trading badly at a huge discount and nobody is betting on this being converted to an ETF (notwithstanding declaration from Grayscale?)

[Daltonik]

Yet another step in the wrong direction.
I cannot understand their strategy about this whole situation.
What is the point of launching a new, doubtful fund, when your flagship is trading badly at a huge discount and nobody is betting on this being converted to an ETF (notwithstanding declaration from Grayscale?)

Maybe this will somehow help and the SEC will have to respond to a letter sent by Grayscale to the regulator, which states that the SEC's actions to approve bitcoin ETFs based on futures and at the same time rejecting applications based on its spot option may indicate a violation of the law on Administrative Procedure Act (APA).
https://www.theblockcrypto.com/post/125817/grayscale-argues-the-secs-bitcoin-etf-treatment-could-violate-the-apa

     

So because of the SEC's position on spot bitcoin ETFs, Fidelity Investments had no choice but to launch the product in Canada.

[fillippone]

Maybe this will somehow help and the SEC will have to respond to a letter sent by Grayscale to the regulator, which states that the SEC's actions to approve bitcoin ETFs based on futures and at the same time rejecting applications based on its spot option may indicate a violation of the law on Administrative Procedure Act (APA).

There's an interesting BlogPost about this letter:

“Unpacking the News” — A New Argument for a Bitcoin ETF

This is a discussion with Craig Salm, Grayscale’s Head of Legal.

A few passages are interesting:

It seems like the next natural question here is: why did the SEC not approve a spot-based ETF?
 
It’s unclear, and our team remains committed to working with the SEC on the conversion of GBTC into an ETF. In the meantime, we should not overlook that the approval of Bitcoin futures-based ETFs represent a major step forward for the entire investment community.
 
The SEC staff has a tough job and important decisions lie ahead. While the SEC continues to engage with the crypto ecosystem, it’s important to remember their mandate to protect investors, while promoting open, competitive markets. We believe this is possible with the approval of Bitcoin spot-based ETFs.
 
As it stands, the Bitcoin ETF landscape is unfair and discriminatory against GBTC shareholders and all of the other U.S. investors looking for an accessible and efficient way to gain their Bitcoin exposure. Fortunately, the Administrative Procedure Act (APA) exists to address situations just like this one — to govern the process by which federal agencies develop and issue regulations, ultimately to protect the American investor.

[Daltonik]

Grayscale Investments®, the world's largest manager, has published the company's third annual report on investor attitudes and views on bitcoin. Key findings include:
26% of investors surveyed already own bitcoin.
59% of the surveyed investors are interested in investing in bitcoin (in 2020, it was 55% in 2019, 36%).
55% of investors who currently own bitcoin have started investing in the last 12 months.
Interest in bitcoin investment products has increased significantly among older investors aged 55-64 from 30% in 2020 to 46% in 2021 and female investors from 47% in 2020 to 53% in 2021.
87% of bitcoin owners own one or more other cryptocurrencies.

”The results of the 2021 Bitcoin investor Survey confirm that more and more investors see long-term value in adding bitcoin and digital currencies to their investment portfolios," said Michael Sonnenschein, CEO of Grayscale Investments.


The report is available at the link: https://grayscale.com/wp-content/uploads/2021/12/Grayscale-2021-Bitcoin-Investor-Study.pdf

[Daltonik]

Due to an error on Monday, FactSet System Inc. has included Grayscale Bitcoin Trust as a Grayscale Bitcoin Trust ETF on its platform used by investors and other Wall Street clients, including Dow Jones. A FactSet spokesperson says the GBTC naming error relating to the bitcoin trust ticker symbol has since been fixed.
A Grayscale representative did not comment on the error in the name, but said that the company "has submitted an application to convert GBTC into bitcoin ETF and it will be considered until July 2022”

https://www.msn.com/en-us/money/savingandinvesting/grayscale-investment-wants-its-largest-bitcoin-trust-to-be-an-etf-a-miscue-briefly-made-its-wish-come-true/ar-AARBYTZ

[Daltonik]

Wow, someone even made screenshots and saved how Grayscale was listed on FactSet looked earlier this week, but the pre-Christmas mistake will remain in memory for now, perhaps in the future becoming a reality. 

 

[Daltonik]

The SEC continues to postpone making a decision on the consideration of the application for Grayscale Bitcoin ETF, and also does not exclude initiating proceedings to determine its justification for refusal, sending a second notice of the extension of the deadline.
https://cointelegraph.com/news/sec-delays-decisions-on-bitwise-and-grayscale-s-bitcoin-etfs

Despite this, Coinbase sent a letter to the SEC on Tuesday urging the agency to approve an application to convert Grayscale Bitcoin Trust into an ETF.
https://www.sec.gov/comments/sr-nysearca-2021-90/srnysearca202190-20109603-263970.pdf

[SquirrelJulietGarden]

In last half of December till early months of 2022, we will see more news about Bitcoin ETFs, postpones, rejections, approvals but I think more of postpones and rejections.

It is not big deal at all because sooner or later, Bitcoin ETFs will become something very normal in Bitcoin market like Bitcoin Futures now. Four years ago,  no Bitcoin futures and in very late of 2017 we have two: CME and CBOE. Now 4 years later, Bitcoin Futures are something very popularly exist on crypto exchanges.

Things in crypto can be developed, expanded and grown up very fast like Lightning.