1/ Bitcoin: What is going on here?? 🧵
Many commentators have begun highlighting the rebirth of BTC as distinct from other speculative froth. Rising price indices to start the year in EM, Europe, China and Bitcoin are supposedly indicative of economic rebirth.
2/We take the under while acknowledging that all good narratives must have an element of truth. Yes, China is "reopening." Yes, Europe did not freeze. But just you wait, Henry Higgins!
3/ The most exciting of these, of course, has been "Bitcoin!" Popularized by Ben Hunt (@epsilontheory the idea of Bitcoin as art makes it stand alone among the speculative assets.
4/ The supposedly worthless/priceless token of accounting for the Bitcoin blockchain has risen nearly 50% from its lows in a testament to the durability of bad ideas.
5/ What has been the proximate cause this time? Perversely, we'd argue it's the squabbling over carcasses that is preventing a final resolution.
6/ The Winklevii are fighting with Barry Silbert over the Grayscale bitcoin trust (GBTC) carcass. Full disclosure, funds managed by entities associated with @Tier1alpha may have positions in securities discussed.
7/ GBTC is an interesting entity -- simultaneously a mechanism for liquidity provisions into crypto AND a mechanism for participation by retail.
8/ It stands somewhat uniquely in our analysis field -- the only fund we can find where it has been under nearly continuous distribution since its inception as measured by the fraction of volume sold at Bid vs Ask. As a comparison, we present ARKK:
9/ As others have noted, GBTC was critical in the 2020 bitcoin run up, providing a mechanism for industry insiders to package bitcoin and sell it at a premium to retail frustrated by the challenges of navigating a "digital wallet." Sloppy buying meets clever selling.
10/ As the premium evaporated, those left holding their GBTC have become increasingly trapped with it trading at a deep discount to NAV. With no apparent catalyst, forced liquidations of entities like 3Arrows manifested in dumping of GBTC:
11/ But the emergence of a potential exit for trapped GBTC holders has apparently manifested in a bid for GBTC and reduced selling pressure even as new funds come into the market. Since Aug 2022, GBTC has been the closest to "accumulation" we've seen since the 2020 BTC run.
In our opinion, it's not a "fundamentals" story (it rarely is), it's a greed story. Until the market grows tired of the DGC drama, or finds itself incapable of further speculation, it's about the flows... or the absence of flows. bitcoin crypto BTC
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👇👇👇this twitter thread.