The 'Widowmaker' Crypto Trade That Helped Blow Up an Industry
Odd Lots
Bloomberg
4.4 • 1.6K Ratings
🗓️ 20 January 2023
⏱️ 43 minutes
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Summary
Over the last year, numerous things have gone wrong for the crypto industry. (Too many to list.) But one thing we've learned is that there's an incredibly high degree of interconnectedness between various firms, all borrowing and lending from each other in a way that created a tremendous amount of fragility. A key entity in all this is GBTC, the Grayscale Bitcoin Trust, which was one of the first regulated entities that allowed ordinary investors to get Bitcoin price exposure. Over time, this trust turned into a behemoth, with numerous players making massive leveraged bets on it. On this episode, we speak with Ram Ahulwalia, the CEO of Lumida Wealth, who explains how the fund works, how the trade worked for investors, and why it's ended in tears for so many players.
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| 0:59.5 | Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wyzenthal. And I'm |
| 1:27.1 | Tracy Allowit. Tracy, a lot has gone wrong for crypto in the last year or so. I think we'll |
| 1:35.0 | let's start there. I think that is safe to say that there are many different scandals, |
| 1:40.0 | blow-ups, disasters, etc. The background to that intro was right before Joe said it. He was going, |
| 1:46.7 | how am I going to start this one? He just went with bad things have been happening. |
| 1:51.0 | Right. We could go for a lot. We could just list them. We don't need to do that. |
| 1:53.7 | No, okay. So one of the bad things that has been happening in the crypto industry has to do |
| 1:59.3 | with several high profile entities. And I'm still trying to wrap my head around the relationships |
| 2:05.3 | between all of them. But we need to talk about what's going on with grayscale, Genesis and Gemini. |
| 2:11.4 | Right. So for a long time, you know, there's no Bitcoin ETF in the United States. For a long |
| 2:17.1 | time, like buying Bitcoin might have been a little tricky. Maybe people didn't want it trust. |
| 2:22.0 | Like some of these online exchanges, some of them for good reasons. If you were some sort of |
| 2:27.0 | regulated entity, like a fund or something or an advisor, you might not be able to get your client |
| 2:32.0 | money into Bitcoin itself. But for a long time, so GBTC, which is this entity owned by a grayscale, |
... |
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