Many market participants only look at the news for general information, such as Grayscale's lawsuit against the SEC. Many people think that Grayscale's goal is to convert GBTC into an ETF, which is of course the best.
Converting GBTC into ETFs is the least harmful way to the market. It is a great benefit to the entire encryption market.
If you only read half of the news, or don’t understand what’s going on, you might as well not read it.
One of the demands of Grayscale’s lawsuit is to ask the SEC to allow GBTC redemption according to the fund’s net assets (Regulation M exemption). Of course Grayscale hopes for this. I think this is Grayscale’s true appeal. This method can ensure that while GBTC continues to exist (Greyscale can continue to charge management fees), DCG can redeem the GBTC it holds. At present, DCG holds approximately 10% without issuing a repurchase invitation. This can not only guarantee Grayscale's management fee benefits, but also meet DCG's capital needs, but it will hurt the market. Because the redemption part is cash, it needs to be converted into cash by selling BTC.
And now there is the possibility of inviting a 20% acquisition. DCG does not have that much money (more than US$2 billion). The money for the acquisition should be raised by issuing conditional bonds. What do you think the conditions will be? By then, DCG will hold a total of 30%. Do you think DCG’s subsidiaries will dissolve the GBTC trust by then? If you charge a management fee, it will take 7-8 years to get it back.
Under normal circumstances, DCG will not make this choice, and will lose management fee income, and dissolution after the invitation to acquire is also a plunder of other GBTC holders. This is a naked way of admitting failure with a bad reputation. But this is no ordinary situation: another DCG subsidiary, Genesis, from which DCG borrowed approximately $1.7 billion, is facing bankruptcy. Although DCG currently holds about 10% of GBTC, according to the Securities Exchange Act of 1933, DCG can sell up to 1% of GBTC in the open market every three months.
What is the 30% GBTC price difference? Hey, it’s really about 1.5 billion.
1.5 billion, is it worth it for DCG? Whether Grayscale wins the redemption exemption against the SEC in the first quarter of next year or Grayscale disbands GBTC, it will be very bad news for the market. If there is any progress, buy GBTC and sell BTC as soon as possible.
