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I must be missing something. This fund succeeds if and only if Bitcoin prices increase. LPs are investing USD, which is immediately converted to Bitcoin. Newly
by acaloiar 3y ago
I must be missing something. This fund succeeds if and only if Bitcoin prices increase.
LPs are investing USD, which is immediately converted to Bitcoin. Newly converted Bitcoin is lent to borrowers, yielding returns for LPs.
Why are LPs willing to incur both default risk and Bitcoin price volatility risk when they could simply lend USD directly to borrowers, incurring only the default risk? If lenders assume Bitcoin borrowers are more likely to default (and I am saying if), they're assuming a greater default risk, in addition to the volatility risk.
I have to imagine Sam Altman and co. have a reason to believe there's something to this model. What do they see that I can't?
- npoc 3y agoIt mentions a 7 year period. The company is essentially going all in on bitcoin and the period will allow them to ride the short term volatility and the 20% _BTC_ denominated interest is an enormous incentive to them. I assume they see bitcoin similarly to me - that it will reach _at least_ $0.5M/BTC by the end of the decade. IYKYK, and it looks like they know.