First of all, we need to make it clear that besides selling some#BTCwhen collecting management fees, Grayscale will not and cannot actively sell BTC, because these assets are not Grayscale’s own, but the users’. Therefore, when users sell GBTC in their hands, Grayscale must reduce its holdings of an equivalent amount of BTC. This is the mechanism of#Bitcoinspot ETF.
So the question now actually becomes, why are GBTC users anxious to sell their GBTC? After all, the halving is about to happen. Now GBTC is already equivalent to BTC to a certain extent, so wouldn’t it be better to keep it? ? This is the most relevant question for many friends.
We are going to divide this matter into three different parts. I will leave what everyone is most concerned about last. First, in November 2023, the US court has approved that FTX can sell its assets to repay users’ losses. This As everyone knows, it includes 744 million US dollars of Grayscale assets, of which GBTC accounts for 22.2 million shares, which is now 36.29 US dollars per share. This part alone is more than 800 million US dollars.
Is it sold out? No, it should still be on sale. After all, there is a limit on weekly sales, and FTX’s bankruptcy team can determine the priority of selling assets by itself. Moreover, FTX made a statement at the time to avoid selling in a way that affects the market, that is, try to It does not affect the market price. For example, the SOL locked by FTX is still waiting on the chain.
Of course, it is uncertain whether the GBTC currently sold contains FTX components, but there is indeed no data indicating that FTX has liquidated all Grayscale assets. And before a#Bitcoinspot ETF is approved, it would be silly to sell, especially when the market is in a state of FOMO, so while there is no clear data, this may be part of the current sell-off.
The second part is the sale by pure GBTC holders. There is another pitfall here, which is Grayscale’s 1.5% handling fee. You must know that including BlackRock and Fidelity, they all have very low handling fees to obtain more information. There are many users, but Grayscale is different. Grayscale naturally has a large number of users, so what Grayscale has to do is not to find ways to get more users, but how to reduce the departure of users. So why do users start from As for Grayscale's departure, this is the third part. We will answer it later. Then Grayscale's increase in handling fees to 1.5% is one of the ways to hope that users will not leave.
Why do we do this? Because Grayscale knows that there are too many users locking GBTC for too long. Many of the shares have changed hands no matter how many times. There may be a very large premium for the cost of many position holders, or even Many position holders have to leave the market even if they lose money, because it was too difficult to circulate GBTC in the past, and there was too much premium against the price of #BTC.
Of course, increasing the handling fee has two benefits. One is to cause hesitant investors to feel pain, and the other is to make investors who are definitely leaving pay more. After all, they are all leaving. Who knows when the Year of the Dog will come back. And judging from the current conclusions of the market, many investors have given up on GBTC because of the 1.5% handling fee, because a lot of funds have gone into other ETFs such as IBIT after coming out of GBTC, so it’s not that users don’t like ETFs, but Don't like GBTC.
Then the question comes to the third part. Why do GBTC users dislike GBTC so much? This is actually covered in the previous part. Part of it is because GBTC has trapped too many people for too long. After the spot ETF is passed, this part The trapped funds turned into huge profits, because the premium between GBTC and#BTCwas very high before. Buying GBTC at this time last year was equivalent to buying BTC at a 40% discount (approximately), so you can get the current price. It is a strong profit.
Many friends may still have doubts about why these people don’t wait until the halving. In fact, Grayscale may think so too. The purchase composition of GBTC is also a main reason, because GBTC is rarely purchased by retail investors, including Sister Mu, FTX , 3AC and other institutions are actually the main buyers of GBTC. They are under pressure. Not all of their funds are their own, but also belong to many investors behind them. Especially when there is a large amount of profit, it is still relative to BTC. Leaving the market when the price is high is the most normal choice.
Friends, do you still remember Sister Mu’s clearance of GBTC before the#Bitcoinspot ETF was approved? This is because of two reasons:
First: Sister Mumu has already expected that the price of#BTCwill correct in the future of spot ETF. And it did appear.
Second: The premium between GBTC and BTC is already very low. Selling GBTC at that time was already the best profit, and this is indeed the case in reality.
So the question comes again, if users think#BTCwill continue to fall or correct, why should they rush to buy from $IBIT? After all, we have seen a large amount of funds entering including BlackRock and Fidelity. Many analysts believe that more than 33% of the funds entering BlackRock and Fidelity will come from Grayscale.
There is another very troublesome thing here, which is tax. Many GBTC accounts come from tax-free accounts (including retirement accounts) or long-term tax-saving accounts (IRA), and tax-free GBTC can be directly entered into other ETFs for free. , this part is also the part with the largest outflow of GBTC. In fact, this part involves the U.S. tax law, which is indeed very complicated, and you only need to have a rough understanding of it.
So in general, from many aspects, GBTC position holders leaving the market is the best choice at this stage, and there is almost no one.
