The day before yesterday said grayscale pull disk, yesterday said grayscale hit disk, today we give you a letter of approval

Original title: "the day before yesterday said grayscale pull disk, yesterday said grayscale hit disk, today we give you a letter of approval"

Original article by ye wang, Odaily planet

& have spent

In recent days, the Chinese and overseas communities have been divided over whether the Grayscale's stockpiling of 350,000 bitcoins is a good thing or a bad thing.

Currency markets tumbled 3.12 encryption and recovering the past more than two months, and goods, the company raised overseas institutions play the "good" news is increasing. Renaissance technologies into the currency futures market, such as the CME and Bakkt compliance exchange open total reached new highs, and one of the most high-profile, or through the currency trust fund (GBTC) exposure to the currency of the gray scale.

Grayscale is one of the few "big buyers" in the cryptographic market. According to the data, the number of bitcoins held by grayscale has increased by nearly 3% this year after bitcoin was halved. So far, the number of bitcoins held in grayscale has reached 350,000. More than. Not only that, grayscale also bought about 50% of ethereum mined in 2020.

Gray founder Barry Silbert is spare no effort to promote the currency for a long time, "besides mainstream currency such as COINS, most encryption currency will eventually return to zero", "1 co, the market is dead, but clear encryption market growth", when the currency in price movements, he would make his twitter online "shout" : "currency prices have hit bottom this year, I just finished with warehouse."

However, when the recent bitcoin repeatedly tried to break ten thousand blocked, the line of eight consecutive Yang was broken, the price shock down, another voice makes investors uneasy, many point of view analysis, gray large-scale entry is not good, but bad.

Admission is not hoarding cash, according to the analysis of institutions, but to speculative arbitrage, is blunt gray, the currency of the trust fund (GBTC) secondary market premium, future GBTC unlock in succession, share premium is erased, institutions into gold scale will reduce, then gray level will also reduce the currency holdings, which causes the currency spot market to selling pressure, the so-called long is a potential short gray.

Which of the two statements is more reliable? Can grayscale manipulate spot prices? Smash dish window period to still have how long? In this article, the daily planet Odaily tries to answer those questions.

Let's first understand what grayscale is, how GBTC works, and what the real requirements of GBTC are.

The absolute status of grayscale and the operation mechanism of GBTC

(hint: readers with some knowledge of grayscale and GBTC can skip to the next section.)

Gray Investment company (Grayscale Investment Trust) by Digital Currency Investment Group (Digital Currency Group) set up in 2013, DCG is one of the world's most active and influential encryption capital, its Investment landscape across each niche block chain industry, after Odaily daily planet DCG against doing a special report: "the reveal stealth has been a long time of the first block chain fund".

DCG's portfolio map (by  Odaily planet)

Grayscale fund (hereinafter referred to as grayscale) was founded by DCG in 2013, which is a trust fund under grayscale investment dedicated to the management of cryptographic assets. This is an investment fund based on the value of its bitcoin holdings, and it works in a compliant way for institutional investors and high net worth qualified investors (imagine investors who don't want to store crude oil, but prefer to buy crude oil indexes).

Due to the relatively complex regulatory environment, imperfect infrastructure and high risks of cryptocurrencies, most institutional investors in traditional financial markets cannot directly invest in cryptocurrencies through exchanges. Institutional demand for "secure" investments in cryptocurrencies has spawned a "compliance" platform, in grayscale, that caters to traditional regulatory requirements.

On September 25, 2013, grayscale established The first bitcoin trust fund (GBTC) on The market, and obtained The private placement exemption registration from The U.S. securities and exchange commission (SEC) in that year, and was approved to go public by The Financial Industry Regulatory Authority (FINRA) in 2015.

Although GBTC is not an ETF, it is the first and currently the only investment product that can be traded in the secondary market of us stocks and track the price of bitcoin. It is also the only product that can buy bitcoin in us pension plans.

GBTC will be open to private placement in the primary market on a quarterly basis to qualified investors and institutional users, who will be allowed to enter the trust either in cash or in the form of BTC (minimum $50,000). When the institution buys GBTC, it is equivalent to buying the corresponding shares in the BTC of grayscale position.

GBTC operation pattern is similar to gold trust fund: by big gold producers to fund company of physical gold, and then by the fund company to physical gold as the backing, in the exchange public offering fund share, sell all kinds of investors, commercial bank lines respectively as fund custody and physical custody, free during the term investors in the fund redemption.

The difference is that the share of GBTC does not support redemption, and need to lock the warehouse for 12 months, the grayscale became only into not out of the "PI xiu".

There is no way for qfii and institutional users to redeem the COINS they have charged, and they can only be cashed out by selling GBTC in the secondary market. Therefore, the quantity of grayscale COINS has shown a trend of unilateral rise since its establishment.

The blue bar is the amount of bitcoin holdings, and the orange bar is the size of asset management

(photo: hot wheel community)

Looking at the blue bar, it can be seen that the position has only increased since 2019, and there is a trend of accelerating growth.

Since the introduction of grayscale GBTC, has been in the "buy buy buy". Its asset management scale soared from $825 million at the end of December 2018 to $2.1 billion at the end of December 2019, and then to $3.2 billion on May 22 this year, which made BTC, with 350,000 pieces in hand, become the "largest bitcoin holder in the world".

Earlier this year, grayscale registered as a company required to report to the SEC, which means GBTC is the first cryptocurrency investment vehicle to report to the SEC on a quarterly basis, informing the company of all unplanned events or changes within the company and sending the relevant audited statements to the SEC.

At the same time, the lockup time of GBTC is also shortened from 12 months to 6 months, and further reduce the investment threshold.

Even if the investors do not meet the conditions to participate in the primary market to raise funds, they are not qualified investors. As long as they have an American stock account, they can trade GBTC in the secondary market just like buying and selling stocks. They do not need to consider the complex gold entry process of the currency exchange and do not need to worry about the lightning run of the platform.

For traditional institutional investors, the cost of learning and trust can be reduced, and the private key management and safe storage of assets need not be worried. In addition, the annual tax season is the biggest headache for U.S. currency holders, and the irs has issued guidance on whether to file a tax return on split and empty COINS. If you own GBTC, you pay capital gains tax just like you would if you traded any other shares.

What does grayscale make money from?

Just like traditional trust funds, gray scale mainly makes money from management fees. As long as investors' demand for gold input in gray scale continues to rise, gray scale will have a steady stream of management fees, which are much more lucrative than traditional trust industry.

Trust funds are generally managed at an annual rate of 0.3-1.5%, depending on their investment objectives and how easy it is to manage.

However, GBTC's annual management fee is 2%. Based on the existing asset management scale, the net profit of 6000 BTC can be charged for one product of GBTC (currently about 53 million us dollars).

In addition to bitcoin, Grayscale has also successively created eight single-asset trust funds and a Grayscale Digital Large Cap Fund that includes five types of mainstream COINS (BTC, ETH, XRP, BCH and LTC).

Trust products of grayscale (picture from grayscale official website)

In the figure above, the annual management fee of trust products in the mainstream currency is generally 2.5% or above, and the management fee of ETC trust is even 3% per year, which is almost twice the management fee of traditional trust fund.

But even if it is high, people keep coming in. After all, investors looking for compliance and convenience have no better option than grayscale.

The existence of grayscale = the risk of future disk smashing?

According to the latest figures on grayscale's website (May 22), GBTC, which costs $10.66, will be awarded; 0.0009618 bitcoins. Based on the current bitcoin market price, the premium is 21 percent.

Green represents the market price trend of GBTC, and black represents the market price trend of BTC (picture from: grayscale official website)

According to data from ycharts, GBTC's premium has existed since the inception of GBTC and reached a record high of 254%. It has declined in the past two years, and remained around 20% in the two months.

GBTC premium data in the last two months (data from: ycharts)

The positive premium is related to the continued growth in overseas demand for bitcoin investments. A quadrennial halve (the wonderful story of deflation driving the currency's price) has also attracted new investors.

Long-term positive premium forms the arbitrage space between the primary and secondary markets.

Institutions borrow BTC to participate in GBTC's private equity in the primary market, obtain GBTC shares, wait 6 months to sell in the secondary market, and then buy BTC to repay the loan, GBTC premium minus the borrowing interest is the profit part. The risk-free operation, known as "white Wolf", only costs six months.

In addition, the institution can also directly buy BTC spot, gold into GBTC shares, at the same time with futures open short hedging. GBTC unlocked to the secondary market to sell, futures flat, arbitrage. The difference between GBTC's premium and interest is profit.

Therefore, there are "institutions using GBTC speculative arbitrage, there is a potential disk risk".

After hearing this, many retail investors worry that the premium of GBTC will affect the spot price of BTC. The reason is that if the premium is supported by overseas speculative demand, the amount of bitcoin holdings will keep increasing to keep the balance. Once a certain day, the premium is gradually worn out, the arbitrage space shrinks, investors' demand for gold input is greatly reduced, and the gray level of management fees cannot be collected, so the position will be reduced, which will increase the selling pressure in the spot market.

In this regard, Yang mindao, founder of dForce, believes that as long as the overall trend of bitcoin price is upward and GBTC premium is positive, investors will always make money. Unless the price of bitcoin falls and the GBTC premium becomes negative, GBTC will come under selling pressure, and the amount of holdings in gray will become smaller, thus affecting the spot price of bitcoin.

Moreover, GBTC has been at a premium, and it is not easy to short,

"Your position cannot be fully hedged because GBTC will not deliver you the actual bitcoin." According to grayscale official data, more than 70% of the private placements in the second and third quarters of 2019 were for customers to exchange their BTC shares for GBTC shares, and less than 30% were for cash receipts.

However, according to an observation by the daily planet Odaily, the GBTC premium has fallen by 30 per cent since reaching this year's high of 41.42 per cent (February 18), and recently hovered between 10 and 20 per cent.

With more arbitrageurs, GBTC's lending rate has reached 13%, according to the current 21.65%& NBSP; After deducting borrowing and interest fees, the room for arbitrage by institutional investors is around 5%. Compared with the beginning of this year, the institutional arbitrage space has been greatly reduced.

Moreover, in April this year, there was a batch of private placement due to unlock, as shown in the above premium list. It is true that the premium declined in April this year, but the spot price of that month kept rising.

Therefore, the fluctuation of GBTC premium has little impact on the price of bitcoin in the short term.

The Odaily planet is also here to remind investors not to panic too early, to think carefully when they hear the bull market is coming, and to be rational when they hear the bull market is going too far. The market is volatile, and the news is only a partial reference, so don't generalize.

& have spent

Reference:

Odaily planet: "what are the most profitable blockchain funds investing in?"

Cow coin ring: "the institution is to grab chips or cut leek?"

Hot wheel community: "the gray scale of 350,000 pieces of BTC has been stored up, which is originally an arbitrage tool!"

Cang childe's micro blog: "as a transaction diagnostician to do business, talk about the" gray fund "thing"

Original link:https://mp.weixin.qq.com

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