Bitcoin, no way to make money

Be careful when discounting Gracecale Bitcoin Trust

No one wants to buy $1 for 60 cents. Even if the currency is the euro, the yen, or Bitcoin, the same answer should be answered. However, there are pitfalls for large holders of cryptographic assets （ virtual currency ）.

　Gracecale Bitcoin Trust （ Ticker symbol GBTC） is a publicly traded mutual fund with approximately $11 billion in assets under management （ approximately 1.5 trillion yen ）, all operations are Bitcoin （ BTC）. Having a securities trading account is a way for everyone to invest in cryptographic assets without the hassle of being directly owned. According to reports to regulators, GBTC had approximately 635,000 BTC at the end of September, which is more than 3% of its distribution, according to coin market cap data.

　GBTC is currently a discount of just over 40% on the BTC price （ dollar ）, but it was a premium for a long time, probably because it was simple for individual investors. A kind of ruling （ Arbitrage ） was trading, which was also favored by institutional investors to buy newly created securities and then sell them at a premium. This led to a significant growth in the grayscale, but in early 2021 exchange prices fell. Unfortunately for the current owner, this process is not currently working in the opposite direction.

　GBTC sponsors Grace Scale Investments whose parent company is Digital Currency Group （ DCG ）. DCG has been authorized to purchase GBTC. This is one way to eliminate discounts. According to the disclosure document, at the end of September, DCG and its affiliates held nearly 10% of the GBTC investment port. According to Craig Salm Chief Justice of Gracecale, securities rules that apply to grayscale products such as GBTC do not allow affiliates to sell more than 1% of their issued mouths in the three-month period. If this rule applies, DCG will become an affiliate.

Some GBTC owners may disband GBTC and seek a share of the underlying capital as a way to converge the discount. However, it is extremely difficult to think about the possibility of such a situation and public accounts. GBTC is a business that earns 2% of the fund’s assets from the enclosed customers by collecting them as an annual fee. At current levels, that amount is over $200 million annually. Moreover, even if that is possible, allowing many BTCs to be sold at once will only reduce the price and profit potential of BTCs.

　However, Gracecale is looking for ways to eliminate discounts in the form of a conversion to GBTC’s listed mutual fund （ ETF ）. The ETF can seamlessly set and redeem, so even if there is a gap, it will be closed by arbitrage. The SEC has so far rejected the ETF conversion application. Gracecale has filed a SEC with the Federal Court of Appeals in the capital Washington.

　The purchase of GBTC has the side of betting on the whereabouts of this process and the general regulatory judgment of the US government. The effects of recent events can increase political opposition to putting cryptographic assets under regulation and giving tattoos. However, it is best to regulate cryptographic assets to protect customers from the catastrophe of cryptographic exchange giant FTX, and a vehicle like ETF is a safer alternative. It may shift in the direction of supporting.

　Some of the recent expansions may reflect investors’ general concerns about the disruption of the cryptographic market associated with FTX’s breakthrough. The Wall Street Journal （ WSJ ） reports so far that DCG has stopped withdrawing customers in November and is seeking funding for cryptographic asset lending （ lending ） Owns the vendor Genesis.

　However, it is important to note that GBTC is a separate legal entity no matter what happens to Grace Scale and its affiliates and parent companies. Grace Scale revealed in mid-November that 「 it is forbidden to secure digital assets that support the product 」. GBTC is a pitcher registered with the US Securities and Exchange Commission （SEC）、Coin base globalHas an independent storage account. The coin base guarantees these coins as isolated in 「 cold storage （ most secure storage method ） 」.

　So can you make a lot of money？　Bitcoin bullish investors can also bet on long-term rise through GBTC. Bold traders who are not interested in betting on the rise of Bitcoin may find the opportunity to hold GBTC to bet on discount width reduction, while betting on short-selling Bitcoin, or falling. But such a two-step bet is neither for casual investors nor cheap.

　There is no money that can be easily made and made by cryptographic investment.