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

[fillippone]

I suggest that we retire this thread. There is no longer anything unique about GBTC, now that it is an ETP and there are a dozen others just like it.

GBTC is pretty unique so far.

• It is the only ETF trading at a discount to NAV, while the others are actually mainly trading at a premium.
• It is by far the most lightly priced of the bunch in terms of bid/ask spread
• It is by far the most liquid of the bung, with volumes racking up to 50% of daily turnover

There is a point in entering Grayscale, even if its fees are astonishingly high when compared to the others.

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[franky1]

GBTC is still unique compared to other ETF. and also has side-drama of the DCG stuff which can still impact it.
i wouldnt suggest locking it. but let it go idle if there is nothing to talk about and people can easily search it and bump it when new pops up

[bbc.reporter]

update GBTC holdings 566,973btc

I have a hard time believing that Grayscale would not have done calculations in regards to how fast that they could expect various GBTC accounts to bleed away, and I would think that Grayscale would have had known the quantity of GBTC shares that are held through tax sheltered accounts versus being held in non-tax privileged accounts.  So presumptively it would be much easier to move value in the tax sheltered/tax privileged accounts as compared to the ones that aren't, and so in that regard, Grayscale might have estimated that ONLY so many of the account holders are going to be ready and willing to transfer value away from their account, and sure it is also possible that Grayscale has miscalculated these kinds of matters, but I would think that they have pretty good ideas about their account holders and through what kinds of vehicles that their GBTC shares are being held.  It would be nice to see some statistics regarding those kinds of matters, if they are available.

what if i told you maybe (DCG)grayscale wants to bleed. after all DCG have some legal issues with gemini and other companies and dont want to be holding a bag of coin they have to hand back to gemini/others. which would then cause de-pegging.
they want to move the coins out of "their sponsorship" and then eventually lower the fee to then have others as agents managing a basket thus no coin associated with DCG to be bitten off in lawsuits.
but instead having agents basket managing coin where Grayscale live off the trade fee's

if DCG is showing as having $XXbillion assets locked in GBTC. it's ripe for picking
if DCG can offload its assets there is nothing to pick. it can also sell its other portfolios to other sister companies. so if/when gemini pull the trigger, DCG can just liquidate with a bankruptcy, only have to pay pennies on the dollar. and then ride the gravy train of income from share fee's, custodial fees via its separate entities

It sure as well could be the case that Grayscale has already calculated that no matter what possible financially viable course of action that they take, they are likely going to bleed a lot of their assets under management, but it likely does not mean that they would like to bleed those assets under management, but they may well have been putting themselves into a worse position if they had engaged more in the race to the bottom of fees race.  

I would still expect that Grayscale may well be trying to calculate the maximum fees that they believe that they are able to receive to help to sustain them as long as they can, even if they continue to have ongoing legal battles.

It would also not be very shocking if Barry knew in advance that they would be dumping bitcoin when GBTC was approved to be converted into an ETF. This is head shaking, however, he might also have shorted bitcoin on January 11 after the SEC's announcement very much similar to how he shorted dogecoin when Elon appeared in Saturday Night Live hehehehe.

@odolvlobo. I disagree. This thread has much knowledge and information and this should continue.

@franky1. Agreed. Also if this thread is locked, I am quite certain someone else would create another GBTC, Barry thread.

[franky1]

so the FTX issues arrises again this week. or finally clawbacks some hidden funds

https://www.reuters.com/technology/ftx-sold-about-1-bln-grayscales-bitcoin-etf-since-its-approval-coindesk-2024-01-22/

ftx had over $1b hidden away in GBTC shares

FTX customers will be a bit happier. as thats another $1b added to the pot scammed customers can get back from the FTX fiasco

it was about 20,000 coins redeemed/sold between ETF launch to monday(before this post)

[franky1]

update(at time of post) GBTC holdings 566,973btc
edit:
update(time of post +14 hours) blackrock holdings 33,430.57btc

update(as of 22nd jan)
GBTC holdings 552,681btc
blackrock holdings 39,925btc

[fillippone]

update(at time of post) GBTC holdings 566,973btc
edit:
update(time of post +14 hours) blackrock holdings 33,430.57btc

update(as of 22nd jan)
GBTC holdings 552,681btc
blackrock holdings 39,925btc

Wondering how much more outflows GBTC will get.
My spider sense gets that we are maybe halfway from the total exit. So, after a little more than another week of suffering, the "9" will finally prevail.
Or is it just wishful thinking and GBTC will deplete all its stash?

[franky1]

update(at time of post) GBTC holdings 566,973btc
edit:
update(time of post +14 hours) blackrock holdings 33,430.57btc

update(as of 22nd jan)
GBTC holdings 552,681btc
blackrock holdings 39,925btc

Wondering how much more outflows GBTC will get.
My spider sense gets that we are maybe halfway from the total exit. So, after a little more than another week of suffering, the "9" will finally prevail.
Or is it just wishful thinking and GBTC will deplete all its stash?

best case, as much as DCG has locked in relation to coins tainted by other projects linked to legal issues.. im not talking about all coin
just the allotment assigned on the books as DCG being sponsors of as a separate entity

[fillippone]

ftx had over $1b hidden away in GBTC shares

If my back-of-the-envelope computations are correct, this sale was all their GBTC stash, and none is left.

They still own a tiny amount of ETHE, but as far as Bitcoin is concerned, they shouldn't be done.
Do you know any resource I can check to prove my stretchy math?

[franky1]

ftx had over $1b hidden away in GBTC shares

If my back-of-the-envelope computations are correct, this sale was all their GBTC stash, and none is left.

They still own a tiny amount of ETHE, but as far as Bitcoin is concerned, they shouldn't be done.
Do you know any resource I can check to prove my stretchy math?

my $1b was pulled from media
looking more into it seems it was 20k btc (ive not looked into Eth as thats not redeemable yet)

yea the 20k btc linked to ftx went out early, just after launch. not this week

[bbc.reporter]

so the FTX issues arrises again this week. or finally clawbacks some hidden funds

https://www.reuters.com/technology/ftx-sold-about-1-bln-grayscales-bitcoin-etf-since-its-approval-coindesk-2024-01-22/

ftx had over $1b hidden away in GBTC shares

FTX customers will be a bit happier. as thats another $1b added to the pot scammed customers can get back from the FTX fiasco

it was about 20,000 coins redeemed/sold between ETF launch to monday(before this post)

It also appears that FTX dropped their lawsuit against Grayscale for charging high fees and refusal to redeem their investors' shares. This is headhsaking because as a company, Grayscale can charge an amount they want and was it also known already that GBTC cannot redeem the underlying coins until the trust is converted into an ETF?

In any case, this picture is the joke about Barry in social media heheehheh. Barry jokes will be plenty on this year. Locking this thread will certainly be a mistake hehe.



Bankrupt cryptocurrency exchange FTX's affiliate Alameda Research has dropped a lawsuit against Grayscale Investments that had accused the digital asset manager of "enriching itself at shareholders' expense", a court filing showed on Monday.

Alameda, which filed the lawsuit in a Delaware court in March last year, had also accused Grayscale of charging high fees and refusing to allow investors to redeem their shares from its two crypto-focused trusts, the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust.

Source https://www.reuters.com/legal/ftx-tied-alameda-research-drops-lawsuit-against-grayscale-2024-01-22/

[franky1]

update: gbtc holdings 536,694btc
(that 100k gone in less than a fortnight)


also gemini this week made legal court claims to ~28k btc (31m shares of gbtc's 600m share cap)
confirmation hearing next month (feb 14th)

January 19, 2024 (Friday)

On January 18th, Judge Lane heard oral arguments in the Adversary Proceeding that Gemini commenced against Genesis regarding the Additional Collateral. Gemini brought this action as part of its efforts to obtain the most substantial recoveries possible for Earn users. As a reminder, the “Additional Collateral” is the 31,180,804 shares of the Grayscale Bitcoin Trust (GBTC) that Gemini secured to protect Earn users (see December 22nd update, below). Genesis admits that it breached its obligations under the security agreement (and subsequent amendments) and that the Additional Collateral was not delivered to Gemini. That would be bad enough, but now Genesis also argues that the Earn users do not have a secured interest in the Additional Collateral. Judge Lane will decide on the motions to dismiss prior to the plan confirmation hearing, which is still scheduled for February 14, 2024.

Looking ahead, both Gemini and Genesis will continue legal briefing on the “Initial Collateral” (a separate tranche of 30,905,782 shares of GBTC). Oral argument on the Initial Collateral is currently scheduled for the week of February 14th.

Also this week, Digital Currency Group, Inc. (DCG) responded to the statements Genesis, the Unsecured Creditors Committee (UCC), and the Ad Hoc Group (AHG) filed last week regarding DCG and DCGI’s obligations under a partial repayment agreement (see January 12th update, below).

Gemini continues to work with other case parties regarding the Plan and the upcoming confirmation hearing. And we continue to fight for the Initial Collateral and the Additional Collateral on behalf of Earn users.

[fillippone]

Speaking about legal fights, I read a very interesting take from Alistair Milne:



This is a very interesting one, and it explains a lot about the current state of things and even why some irrational decisions were made about fees.
The bad news is that apparently a lot of selling is yet to be expected. 

[Troytech]

Can anyone really tell why Grayscale decides to sell its btc on coinbase instead of otc? And this excessive selling of spot on coinbase is actually damping the bull run power, I smell something fishy going on here

[franky1]

update: grayscale holdings 523,516btc

Can anyone really tell why Grayscale decides to sell its btc on coinbase instead of otc? And this excessive selling of spot on coinbase is actually damping the bull run power, I smell something fishy going on here

just treat it as discount season. last chance to buy low compared to start of month before the growth towards 2025 ATH

i was expecting coinbase as custodian (central reserve) to OTC(coinbase prime) trade privately in-cash between two interested AP(agent/brokers) wanting to move between different ETF

This is a very interesting one, and it explains a lot about the current state of things and even why some irrational decisions were made about fees.
The bad news is that apparently a lot of selling is yet to be expected.  

fees are more of a deterrent for new AP grabbing btc and wanting to lock into grayscale
grayscale needs to offload its own stash to pay off debt so doesnt want new baskets of shares competing with shares they want their clients redeeming of DCG locked baskets
the fee's are negligible amounts compared to the lumps of debts owed. even if you added up X years of fee's it wont cover the billions of debt
i think its just a shuffle game at the moment for dcg/grayscale. and later they will drop fee's and invite AP back in with new baskets.. or fizzle away

[Troytech]

update: grayscale holdings 523,516btc

Can anyone really tell why Grayscale decides to sell its btc on coinbase instead of otc? And this excessive selling of spot on coinbase is actually damping the bull run power, I smell something fishy going on here

just treat it as discount season. last chance to buy low compared to start of month before the growth towards 2025 ATH

I guess taking advantage would just be the best instead of worrying about what they are doing, dip buys rules 🥳🥳🥳

[fillippone]

The ETF world is evolving fast.

ETF's are coming way more aligned:

There are a couple of graphs from James Seyfarth.

The premium/discounts are getting closer and closer:




The arbitrage band is then closing:



This represents the higher premium less, the wider discount. If IBIT is 0.5% premium and GBTC is -2.5%, or 2.5% discount, then the arbitrage band is 0.5%+2.5%=3%

The machine is cranking up, and the market forces are pushing APs to be more efficient at creation/redemption and closing arbitrage possibilities.

[bbc.reporter]

Speaking about legal fights, I read a very interesting take from Alistair Milne:



This is a very interesting one, and it explains a lot about the current state of things and even why some irrational decisions were made about fees.
The bad news is that apparently a lot of selling is yet to be expected. 

I reckon might it be good to create a basic estimation on all of DCG's payables and use that to also estimate when Grayscale might stop dumping on our faces based on the amount of bitcoin that they are selling per day.

This is head shaking for Barry because he was criticizing the hedgefunds and the institutional traders in the cryptospace as high risk. It appears that he was one of them hehehe.

[franky1]

the alistair milne tweet.. doesnt make sense

he explains
'DCG has ~$2b of debt.. so needs high fees to use high fees to pay off debt'
'DCG has ~$2b of debt.. so needs to sell $2b of its locked coin to pay off debt'
all in the same tweet..

however even at a discount lets say $40k/btc
selling just 50,000btc would cover $2b
however grayscale dropped by over 100k and still dropping. (502k from over 640k = over 138k)
or in fiat terms they took $5.5b+ out of their own game

its not a high fee to use fees to pay debt. its a high fee to create a closed door to not introduce new share buckets to compete with the need for grayscale to sell its own shares and then relinquish control of those coins

[JayJuanGee]

the alistair milne tweet.. doesnt make sense

he explains
'DCG has ~$2b of debt.. so needs high fees to use high fees to pay off debt'
'DCG has ~$2b of debt.. so needs to sell $2b of its locked coin to pay off debt'
all in the same tweet..

however even at a discount lets say $40k/btc
selling just 50,000btc would cover $2b
however grayscale dropped by over 100k and still dropping. (502k from over 640k = over 138k)
or in fiat terms they took $5.5b+ out of their own game

its not a high fee to use fees to pay debt. its a high fee to create a closed door to not introduce new share buckets to compete with the need for grayscale to sell its own shares and then relinquish control of those coins

You are not really pointing out any place that is contradictory and/or confusing, except maybe you are making it confusing in your own way of clarifying and confusing at the same time (a unique franky1 talent... hahahahha).

1) I think that any business should have goals to maximize their profits, and surely if they have gotten themselves into somewhat of a financial pickle, then they could engage in a variety of tactics that involve both selling some of their own GBTC shares, but also keeping the fees up on everyone still brings in way more fees (even with a so far bleed off of 21.5% of their funds - if we use your numbers).

2) I am not clear exactly how many shares of the 138k BTC would have had been Grayscale's, and maybe it is not even close to 50k BTC that they have sold, but others are selling their own GBTC shares and so then Grayscale has to sell the underlying bitcoin when such sales happen from their various clients.

I am pretty sure that there were already estimates that GBTC would end up losing around 25% of its holdings in a fairly short period of time once the competitive products were offered, so it is almost as if we are in the ballpark of that earlier estimate, and maybe it ends up getting up to 30% to 40% of the total AUM lost, in the next 3-4 months, that is still not going to be any kind of major catastrophe for Grayscale, and they likely are still doing better by keeping their fees at 1.5% for the whole year, or maybe they will reduce them at some point later down the road, but they may well still be better off to do a more gradual reduction in their fees rather than engaging in the race to the bottom that the newbie entrants seemed to have had tried to inspire, in which Grayscale likely does not need to play that game, even though they are getting a lot of negative press in the last 2-3 weeks.

[fillippone]

the alistair milne tweet.. doesnt make sense
<...>

<...>
I am pretty sure that there were already estimates that GBTC would end up losing around 25% of its holdings in a fairly short period of time once the competitive products were offered
 <...>

To my personal spider-sense, GBTB is almost halfway through selling: the second half of flows might be more balanced from the first investors who wanted to rush out of the GBTC investment. This kind of actor doesn't really care about the net PNL, rather than all the other characteristics such as liquidity and AP dealers involvement.