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I think if it were an ETF, which it isn't, then a "redemption" would mean someone could buy a large amount of bitcoin and trade it for a set amount of GBTC shar
by vba616 4y ago
I think if it were an ETF, which it isn't, then a "redemption" would mean someone could buy a large amount of bitcoin and trade it for a set amount of GBTC shares.
I'm not sure why someone would frame "not having a redemption mechanism" as a choice by Greyscale to inflate the price - it's occurred to many people to make a crypto ETF for more accurate prices, and I vaguely thought that Greyscale in particular had been trying.
- seanhunter 4y agoCreation/redemption is the fundamental mechanism that keeps ETF prices in line with their constituents. How it works for a normal ETF is there is a group of participating brokers (basically all the big banks usually) who have the right to create units by handing in the constituents of the basket and the corresponding right to redeem units for the constituents. This keeps the price within some bounds.
- Thorrez 4y ago>someone could buy a large amount of bitcoin and trade it for a set amount of GBTC shares. They allowed that (with a 6 month delay) (until March 2021 when they stopped allowing it). That's basically what the entire article is about. Redemption is going in the opposite direction. And they didn't allow that (well, they did allow it, but stopped in 2014).