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GBTC - What it is, benefits and limitations
GBTC is a business trust.
Ownership shares trade transferring ownership of bitcoin held in the trust. But owners can't take the bitcoin out, all they can do is sell the shares to someone else.
I mention ponzi dynamics, I really mean the same zero sum dynamics. Ponzi is the the illusion of profits from some kind of 'investment', but anyone making money on GBTC does so because someone is buying at a higher price than them. But the beauty of this is that as a shareholder you actually do own the bitcoin inside the trust. So even though you only profit from selling shares to someone else, you do actually own the bitcoin inside, and it isn't the definition of a ponzi. A real bitcoin ownership exchange is taking place.
No one can't take the bitcoin out and force the GBTC to trade 1 to 1 with bitcoin. There is no arbitrage between GBTC price and bitcoin price. Maybe that is there for a reason. Maybe that is why the SEC still will not approve bitcoin ETFs.
GBTC is all about perception. To an extent so is bitcoin, but GBTC is removed once from the actual bitcoin, since the bitcoin cannot be sold if there is a premium and rebought at the lower market price. If GBTC is a business trust the trustee should be acting to the benefit of its holders.
The rules of a trust state the assets in the trust cannot come out- perhaps that is the reason the bitcoin can't come out to profit off of the difference in prices between GBTC and bitcoin.
GBTC is an interesting product. Create a crypto and put it in a business trust- that means that it can never come out. If it is a stablecoin, it can't be redeemed. Is this a way of manipulating crypto prices? Create a new token, lock up most of it in some kind of trust vehicle, then it looks scarce, or it can't ever be redeemed if something 'backs' it.
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By critical_thinking_brainGBTC is a business trust.
Ownership shares trade transferring ownership of bitcoin held in the trust. But owners can't take the bitcoin out, all they can do is sell the shares to someone else.
I mention ponzi dynamics, I really mean the same zero sum dynamics. Ponzi is the the illusion of profits from some kind of 'investment', but anyone making money on GBTC does so because someone is buying at a higher price than them. But the beauty of this is that as a shareholder you actually do own the bitcoin inside the trust. So even though you only profit from selling shares to someone else, you do actually own the bitcoin inside, and it isn't the definition of a ponzi. A real bitcoin ownership exchange is taking place.
No one can't take the bitcoin out and force the GBTC to trade 1 to 1 with bitcoin. There is no arbitrage between GBTC price and bitcoin price. Maybe that is there for a reason. Maybe that is why the SEC still will not approve bitcoin ETFs.
GBTC is all about perception. To an extent so is bitcoin, but GBTC is removed once from the actual bitcoin, since the bitcoin cannot be sold if there is a premium and rebought at the lower market price. If GBTC is a business trust the trustee should be acting to the benefit of its holders.
The rules of a trust state the assets in the trust cannot come out- perhaps that is the reason the bitcoin can't come out to profit off of the difference in prices between GBTC and bitcoin.
GBTC is an interesting product. Create a crypto and put it in a business trust- that means that it can never come out. If it is a stablecoin, it can't be redeemed. Is this a way of manipulating crypto prices? Create a new token, lock up most of it in some kind of trust vehicle, then it looks scarce, or it can't ever be redeemed if something 'backs' it.