I am quite surprised everyone is struggling to understand what’s going on with $GBTC and #Bitcoin price action after #BitcoinETF approval.
Do you remember the famous “ $GBTC Basis Trade” that sent to the grave the likes of #BlockFi and #3AC ?
In a nutshell, for years, many have been buying $BTC then delivered them to $GBTC to create Trust shares at that time trading at a chunky premium.
These people bagged an immediate profits overlooking the below risks:
- Their $BTC were locked up in a Closed Trust with no way out
- $GBTC could potentially trade at a discount against $BTC at some point (like it happened for a very long time in the bear market)
Why the likes of #3AC and #BlockFi went bust? Because they put on this trade with a massive amount of leverage.
So what you are seeing happening is simply a big unwind of all this “basis trade” (with toxic leverage coming out from $BTC in the process) hence the massive outflows from $GBTC (post in quote below).
Hopefully $GBTC has all the $BTC to repay the outflows as Coinbase certified before (but never showing the addresses…..)
