Are GBTC Unwinds Bullish or Bearish for Bitcoin?

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 9 July 2021

⏱️ 22 minutes

🔗️ Recording | iTunes | RSS

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Summary

NLW explores the debate surrounding the GBTC unlock’s bearish or bullish nature on this episode of “The Breakdown,” including: Historical impacts of market structure on prices GBTC’s influence on markets as its premium attracted investors Analysis of the GBTC unlock bearish vs. bullish debate Grayscale Bitcoin Trust, GBTC is an investment vehicle that allows institutional and public market investors to invest in bitcoin without purchasing the cryptocurrency directly. While many GBTC investors were simply looking for public market exposure to bitcoin, many firms also took a more strategic approach to capture the neutral arbitrage trade of GBTC shares trading at a premium to the native asset value (NAV) of bitcoin. The demand for public market vehicles coupled with a lack of other alternatives placed GBTC at a desirable premium. The GBTC NAV trade was a significant source of buying pressure through the back half of 2020 and the beginning of 2021, but when the premium turned to a discount (thanks to a variety of factors, including competition from other bitcoin proxies in the public markets), that source of buying pressure dried up. When an investor buys into GBTC, their shares are locked up for six months. More than 100,000 bitcoin worth of shares are expected to be released throughout July. The looming flood of shares into secondary markets has sparked a debate on whether the unlock will be bearish or bullish for the spot price of bitcoin. Featuring commentary from Lyn Alden, Loomdart, Willy Woo and more. -- Enjoying this content? SUBSCRIBE to the Podcast Apple: https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M= Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW The Breakdown is sponsored by NYDIG and produced and distributed by CoinDesk.com

Transcript

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0:00.0	the unlock phenomenon is ultimately a pretty transitory phenomenon. What seems more significant
0:05.6	to me is simply acknowledging how tied into the run-up the RBTC Nav Trade was in the first
0:10.8	place. In other words, the most bearish thing about grayscale isn't the set of unlocks. It was the
0:15.7	shift from a premium to a discount and the consequent loss of perhaps the biggest buying pressure
0:20.3	we had in the space. That helped stop the momentum going into the consequent loss of perhaps the biggest buying pressure we had in the space.
0:21.9	That helps stop the momentum going into the absolute barrage of FUD that characterized the last quarter.
0:28.2	Welcome back to The Breakdown with me, NLW.
0:32.3	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:39.4	The breakdown is sponsored by Nidig and produced and distributed by CoinDesk.
0:45.8	What's going on, guys? It is Thursday, July 8th, and today we are talking about the latest,
0:51.3	greatest debate on Bitcoin Twitter. Are the grayscale Bitcoin Trust
0:56.1	Unlines bullish for Bitcoin? Now, as you will well know, I talk a lot on this show about
1:03.7	the big picture. Global macro, large patterns of history, where Bitcoin fits as a disruptive
1:09.8	force, how that disruption is connected
1:12.2	to other larger global trends. I mean, hell, I actually used 15th century Genoese merchant
1:18.1	networks as a reference point yesterday. And frankly, it took all my resolve not to go more
1:22.9	in depth about how Italian merchants use social capital and social networks as the grounding for some of the
1:28.2	earliest modern economic instruments, and you get the point. I love some good historical context,
1:33.7	and I love big patterns. However, hopefully you've also heard me explain why, because I'm so
1:40.4	inclined towards macro-patternistic explanations of things, I'm always trying to check that impulse
1:46.4	with data and with other explanations that don't necessarily involve some grand narrative
1:51.0	or great pattern of history. In particular, when it comes to Bitcoin and the crypto markets as a whole,
	...

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