Ben_Lilly

GBTC Premium Will Return

COINBASE:BTCUSD   Bitcoin / U.S. Dollar
The GBTC premium is now a discount.

Which is creating a lot of uncertainty to its future. What I'd like to remind readers is each time a wave of large unlockings hit, not only does bitcoin's spot price rise, but the share price of the Trust gains in value with respect to its underlying holdings ( NAV ). If we ignore the fact it's at a discount then the likelihood of this measure to rise based on history is batting one-thousand - perfect.

If we take into consideration the massive wave of unlockings coming ahead, there's reason to believe the premium will return (unless it converts to an ETF before).

For more information on what this Grayscale Effect is and why it happens, here's a quick read to explain: https://jarvislabs.substack.com/p/the-gr...

-B
Your Pulse on Crypto,

Ben Lilly

Comments

I've read if it converts to an ETF the discount is gapped up to par for existing holders. Is this true and if so where does the "free money" come from?
+1 Reply
Converts to an ETF? This is good or bad for the bull market? Thx ;)
+1 Reply
Ben_Lilly KubaKon
@KubaKon, U.S. ETF is long-term bullish. But for this trade, it means the party is over.
+1 Reply
PublicSpace Ben_Lilly
@Ben_Lilly, Thank you! hope bull run coming soon again. Btw I'm having trouble understanding "unless it converts to an ETF before". Can you tell what that means?
Reply
Ben_Lilly PublicSpace
@PublicSpace, we're still in a bull run. If it converts to an ETF than it's 1:1 parity... meaning no discount nor premium. Why send BTC to GBTC if it's an ETF? It kills this trade and the effect caused from GBTC acting like a bottomless bit is over... it'll be time to watch ETF inflows at that point, and we'll need to hope the approved ones require physical holdings, not just paper exposure.
+3 Reply
PublicSpace Ben_Lilly
@Ben_Lilly, Thank you very much
Reply
"each time a wave of large unlockings hit, not only does bitcoin's spot price rise, but the share price of the Trust gains in value with respect to its underlying holdings ( NAV ). If we ignore the fact it's at a discount then the likelihood of this measure to rise based on history is batting one-thousand - perfect."

It doesn't look like this fits anymore - the reason why the unlockings have caused btc spot to rise (increasing share premium) has been because there's always been a premium to play the sell & buy-back spot game with. currently that isn't the case for the first time on this chart.

no premium = no buying back spot bitcoin to capture it

so this has to flip into a premium another way for the effect to continue - through other parties buying up BTC outside of this game, Grayscale buying back enough GBTC shares (if possible), enough participants holding their shares long enough waiting for premium to return etc
Reply
JasonP2049 JasonP2049
@JasonP2049,

I guess it depends, if enough participants get shook & leave Grayscale by selling the unlock at a discount & buying back their spot btc to take elsewhere it could have the same effect. would a lot of them buy spot for this though? considering other options are popping up.

still could be a mutual desire in participants for the game to continue so some bid comes in to save the day driving up premium before unlock
Reply
JasonP2049 JasonP2049
@JasonP2049, if it stays low / a btc ETF hits. this effect might happen on ETH / the other alt products if they reach high enough inflow. ty.
Reply
also not sure how much it matters not off by much but i'm not getting the exact same unlock dates as this chart going by Grayscales report of cumulative inflow. looking for surges in weekly inflow I got the same date for march 29th unlock.

But currently 2020 inflow flattens until 21st October, which puts the next big unlock starting at 19th April (chart has it at 21st)

The 9th & 10th week after this starts have gigantic surges in inflow compared to the rest, so i'll be on the lookout for big things those weeks especially if premium is up and there's still an appetite for these players to hold BTC in grayscale & continue the game.
Reply
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