Re: Everything you wanted to know about Grayscale BTC Trust but were afraid to ask!
Are we finally seeing the beginning of the end for Grayscale's dominance of the way institutional buyers get exposure to Bitcoin??
Premium has collapsed due to lack of buyers in their primary market. So they've closed the fund, no doubt hoping to build up buy momentum by not allowing buys for a bit. Pretty bad when you are the market leader in the hottest investment in the world but you have to artificially try to inflate your premium/profits by closing the fund.
With other trusts and hedge funds opening up the past couple months, plus the Canadian ETFs just starting recently, I can see the high premium / high fee model of Grayscale starting to seem highly outdated to investors. Premiums and fees should in general shrink close to zero in a world in which there are more and more ways to get into Bitcoin. Not too surprising to see Grayscale market drying up as Wall St gets more and cheaper and more direct options to get into Bitcoin.
Only thing that sucks is that for the past few months we could get a good judgement of institutional buying just from looking at Grayscale, which is obviously not the case anymore.
Premium has collapsed due to lack of buyers in their primary market. So they've closed the fund, no doubt hoping to build up buy momentum by not allowing buys for a bit. Pretty bad when you are the market leader in the hottest investment in the world but you have to artificially try to inflate your premium/profits by closing the fund.
With other trusts and hedge funds opening up the past couple months, plus the Canadian ETFs just starting recently, I can see the high premium / high fee model of Grayscale starting to seem highly outdated to investors. Premiums and fees should in general shrink close to zero in a world in which there are more and more ways to get into Bitcoin. Not too surprising to see Grayscale market drying up as Wall St gets more and cheaper and more direct options to get into Bitcoin.
Only thing that sucks is that for the past few months we could get a good judgement of institutional buying just from looking at Grayscale, which is obviously not the case anymore.
Negative, premium has collapsed due to lack of buyers in their secondary market. Primary market buys at NAV so directly tied to bitcoin price. As far as it being the end for them, only when better alternatives like ETF come online, until then that's the only game in town for pension funds and people who want to hold paper BTC.
Ah perhaps you're right about the secondary as opposed to the primary market. But the main point is both the primary and secondary market have collapsed for Grayscale. This is because there are better alternatives already. Several competing trusts and funds that are cheaper have come out the past couple months, plus there are two Canadian ETFs now that I believe US investors should have full access to (though I'm sure a US ETF will gain a lot more traction than Canadian ones). Both Grayscale markets are collapsing because investors have better cheaper options now that Grayscale isn't the only game in town. It only dominated before because it was the only game in town for people who either legally couldn't or didn't want to directly buy Bitcoin. Grayscale need to drop their fees quite a bit if they want to have any chance of competing against the alternatives.
Primary market just tracks BTC price and cannot collapse especially without redemption. Redemption would provide a floor for the secondary market. Not sure which better alternatives you're talking about, I'm not sure if US retirement accounts are allowed to invest in Canada's ETF on TSX
as far as other OTC funds, as long as inflow funds are restricted from trading for 6m-1yr there should always be a premium on secondary market. GBTC has first mover advantage and that means volume, sure other OTC funds can offer lower management fees say 50bps, but with everything else being equal all that would mean that GBTC would be trading just 1.5% lower vs the other fund. I can't see how 2% management fees can cause premiums to go from 40% to a -2% discount.All the premium discount means is that there are more sellers on secondary market than buyers. It might be simply because of the correction, or rumors of US ETF spooked the market or/and someone is front running the news. With shares trading at discount there's no reason to pay more at the primary and be locked in for 6m when you can pay less for exactly same shares and don't have any restrictions. All the "true" cash that was coming in the primary should theoretically now just come in on secondary, of cours without the in-kind trades and cash that was coming in simply to arb the premium.