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They're not the same. GBTC traded at a premium because custodianship of bitcoin is a service which could provide value. Currently the consensus view is that thi

They're not the same. GBTC traded at a premium because custodianship of bitcoin is a service which could provide value. Currently the consensus view is that this value is negative -- maybe people don't trust GBTC in particular, maybe people don't want to trade a BTC derivative on regulated markets, maybe custodianship isn't worth as much as they're charging after all. But it's not exactly the same product, the same as a cash settled silver futures contract and holding silver in your basement are not the same product.

vba616 4y ago
It's obvious it's not exactly the same product. The definition of arbitrage is what's not mutually understood. Like the "is Pluto a planet" argument. Say that your position is that only arbitraging between GBTC and GBTC on different exchanges is really arbitrage. Well, what if that doesn't converge? There has to be a difference in the first place, and some uncertainty. So if "exactly the same product" doesn't converge, then you can say that it isn't exactly the same after all. Which means that the definition of "same", however you choose, must be a bit arbitrary. Definitions are arbitrary, but I think there are objectively bad definitions, which are so flexible that they can include or exclude everything or that definitely do include or exclude everything.
- vgatherps 4y ago
  > Say that your position is that only arbitraging between GBTC and GBTC on different exchanges is really arbitrage. Well, what if that doesn't converge? There has to be a difference in the first place, and some uncertainty. Assuming exchange withdrawals and deposits are open (and putting aside that you technically have a claim to withdraw, not a coin in your own wallet), it doesn't matter what happens to the price gap because you withdraw the coin that you purchased and deposit to close your short. When a crypto exchange has withdrawal/deposit issues, you do see prices on that exchange start diverging, because coin X on said exchange stops being fungible with the rest of the world.

vba616 4y ago

It's obvious it's not exactly the same product. The definition of arbitrage is what's not mutually understood. Like the "is Pluto a planet" argument. Say that your position is that only arbitraging between GBTC and GBTC on different exchanges is really arbitrage. Well, what if that doesn't converge? There has to be a difference in the first place, and some uncertainty. So if "exactly the same product" doesn't converge, then you can say that it isn't exactly the same after all. Which means that the definition of "same", however you choose, must be a bit arbitrary. Definitions are arbitrary, but I think there are objectively bad definitions, which are so flexible that they can include or exclude everything or that definitely do include or exclude everything.

vgatherps 4y ago
> Say that your position is that only arbitraging between GBTC and GBTC on different exchanges is really arbitrage. Well, what if that doesn't converge? There has to be a difference in the first place, and some uncertainty. Assuming exchange withdrawals and deposits are open (and putting aside that you technically have a claim to withdraw, not a coin in your own wallet), it doesn't matter what happens to the price gap because you withdraw the coin that you purchased and deposit to close your short. When a crypto exchange has withdrawal/deposit issues, you do see prices on that exchange start diverging, because coin X on said exchange stops being fungible with the rest of the world.