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This really sucks for Grayscale holders. As of the close today, $GBTC owners have the rights to $18.62 of Bitcoin per share and the market is pricing it at $13.

by kolbe 4y ago

This really sucks for Grayscale holders. As of the close today, $GBTC owners have the rights to $18.62 of Bitcoin per share and the market is pricing it at $13.32. And there is no way to redeem the shares for Bitcoin. By converting to an ETF, this would have become possible. But now, the $12.9b of assets Grayscale holds will be locked up in perpetuity while its investors watch the fees get eaten up.

futevolei 4y ago
A friend who does business with them said if the sec denied them they would file suit (check). If that doesn’t work they will open up a window to let holders convert at nav a portion of their holdings. For the remaining they are considering lowering their fees.
s1artibartfast 4y ago
Can shareholders or private equity liquidate the company? Seems like a lot of money to be made?
- wmf 4y ago
  I wonder if the slippage of liquidating $13B worth of Bitcoin is already priced in. In other words, if GBTC was liquidated maybe shareholders would only get $13 per share so the current market price is fair.
rkagerer 4y ago
Certainly sucks, but it's not unexpected there's a price differential. GBTC was never equivalent to real Bitcoin. I can understand some investors speculating they'd get the option to convert, but that exit always had risk attached (in terms of how long it would take and whether it ever happens).
paulgb 4y ago
As Morningstar has pointed out, Grayscale has the right to fix this themselves, but they choose not to. They allude to the fact that Grayscale takes a generous fee from the managed capital being a possible reason they don’t. > Grayscale has the power to flip this dynamic. Issuers of closed-end funds can redeem shares at the NAV; this allows investors to sell their shares back to the trust, which would close the discount. Using the example above, investors could exchange their $0.85 trust shares in for the $1.00 of Bitcoin it represents. […] > Yet the redemption option might be unpalatable for Grayscale. It would result in lower assets under management, as Grayscale would need to deliver Bitcoin to investors trading in its shares. The firm charges a whopping 2.00% management fee on trust shares (another factor that drives differences between the share price and the underlying Bitcoin), which it may be reluctant to give up with a smaller asset base. https://www.morningstar.com/articles/1068472/the-problems-with-the-worlds-biggest-bitcoin-fund https://www.morningstar.com/articles/1068472/the-problems-wi...

by kolbe 4y ago

futevolei 4y ago

A friend who does business with them said if the sec denied them they would file suit (check). If that doesn’t work they will open up a window to let holders convert at nav a portion of their holdings. For the remaining they are considering lowering their fees.

s1artibartfast 4y ago

Can shareholders or private equity liquidate the company? Seems like a lot of money to be made?

wmf 4y ago
I wonder if the slippage of liquidating $13B worth of Bitcoin is already priced in. In other words, if GBTC was liquidated maybe shareholders would only get $13 per share so the current market price is fair.

rkagerer 4y ago

Certainly sucks, but it's not unexpected there's a price differential. GBTC was never equivalent to real Bitcoin. I can understand some investors speculating they'd get the option to convert, but that exit always had risk attached (in terms of how long it would take and whether it ever happens).

paulgb 4y ago

As Morningstar has pointed out, Grayscale has the right to fix this themselves, but they choose not to. They allude to the fact that Grayscale takes a generous fee from the managed capital being a possible reason they don’t. > Grayscale has the power to flip this dynamic. Issuers of closed-end funds can redeem shares at the NAV; this allows investors to sell their shares back to the trust, which would close the discount. Using the example above, investors could exchange their $0.85 trust shares in for the $1.00 of Bitcoin it represents. […] > Yet the redemption option might be unpalatable for Grayscale. It would result in lower assets under management, as Grayscale would need to deliver Bitcoin to investors trading in its shares. The firm charges a whopping 2.00% management fee on trust shares (another factor that drives differences between the share price and the underlying Bitcoin), which it may be reluctant to give up with a smaller asset base. https://www.morningstar.com/articles/1068472/the-problems-with-the-worlds-biggest-bitcoin-fund https://www.morningstar.com/articles/1068472/the-problems-wi...