The *DANGER, COMING* Collapse of the Grayscale Bitcoin | Crypto WARNING.

oh is the grayscale Bitcoin trust going

to go bankrupt why is vitalik tweeting

really cryptic things and why is the FTX

hacker converting ethereum to BTC we've

got a lot to cover and it is the start

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so what's going on well first vitalik is

tweeting some cryptic things vitalik

here is suggesting that he's hearing

through the grapevine that something

important is about to happen but then he

also says yeah but the problem is our

space has this issue in that there's a

big history of people using it or using

rumors as a way to induce price

movements in a direction that helps

their bags vitalik of course is the

co-founder of ethereum and a lot of

folks are wondering hey vitalik maybe

you know what just don't say anything

because there are already enough fears

that the SEC thinks ethereum which is

now as of September 15th moved over to

proof of stake is too centralized with

Lido for example having control of 31

percent of the ethereum network coinbase

controlling about 15 Kraken controlling

about 8.5 and centralized control being

one of the aspects that could

potentially make ethereum a security and

therefore fall under the heavier

scrutiny of the SEC versus Bitcoin which

might be considered more of a commodity

TBD but these sorts of comments by

vitalik don't really help reiterate to

the SEC don't worry if ethereum is

decentralized then you've got the FTX

hacker converting ethereum to BTC

causing large price drops legs down in

the price of ethereum now some folks are

arguing that this hacker is actually

strategically trying to dump ethereum by

potentially using separate clean wallets

so wallets that are not the hack wallets

where people are tracking every single

move and instead are clean wallets that

nobody knows exists they're being set up

with derivatives like short-term options

to in a very very short manner where you

get big price movements in the

underlying derivatives like imagine

doing Friday call options on ethereum

but then shorting it so getting Friday

put options on ethereum then making

these large movements like what we're

seeing the hacker do with ethereum

dumping ethereum so far in the last 24

hours they've dumped 15 000 ethereum

converted it to about 16 million BTC

that's dollars worth of BTC and a 25

000 ethereum into 30 million dollars of

BTC so you're clearly seeing an effort

here to dump ethereum and it's creating

a lot of fear that this is going to

continue to happen which could be

leading to massive windfall profits for

them while they're shorting ethereum

that's just a room where we obviously

can't confirm that because that's the

nature of a clean wallet is we don't

know where it is of course the original

thesis was that this hacker would just

throw everything into a tornado cash

Style app and then slowly siphon the

money out so far we haven't seen that

happen yet but what we have seen happen

is a lot of fear uncertainty and doubt

around the grayscale Bitcoin trust see

the grayscale Bitcoin trust is owned by

the parent group digital currency group

they presently own about 28 million

shares of the grayscale Bitcoin trust

but before them two organizations held

more money one was three arrows Capital

three ac they held about 38.9 million

and they went bust blockfi held about 36

million and they're going bust and have

threatened and have potentially already

liquidated a lot of their grayscale

Bitcoin trust remember the grayscale

Bitcoin trust is a mutual fund that

doesn't actually have the trade at what

the underlying value is let's make that

really clear so if the grayscale Bitcoin

trust has a hundred dollars in it and

it's a mutual fund it could trade for

anything the market wants and right now

the market says that that 100 in Bitcoin

is trading for as much as a 45 discount

which means that 100 is trading for

55 dollars that can happen because

mutual funds don't trade at what's known

as net asset value like

ETFs do now what's fascinating about

that is a lot of people are saying okay

well I mean it's going to Gap back up

right well maybe we'll talk about that

in this video because other folks are

saying no it's going to go bankrupt and

they're going to end up having to

liquidate all their Bitcoin and they're

going to have to dump it but know this

if you ended up investing at

55 bucks let's just say and it gapped up

to a hundred you'd be making over a 73

return in probably or potentially a

short period of time or the underlying

value of Bitcoin is trading at such a

discount in the grayscale Bitcoin trust

because people actually think that

Bitcoin is going to become worth a lot

less and therefore it might never

actually Gap up it might just see you

might just see Bitcoin gap down to that

55 in value and then it's like uh dang

it there's no more Arbitrage opportunity

anyway

what do I think and what's some more

fact when we think about this well the

first thing that you have to remember is

that the grayscale Bitcoin trust makes a

lot of money in fact there are two of

these mutual funds there's the grayscale

Bitcoin trust that charges a two percent

annual fee this compared to a typical

ETF which charges only about 75 basis

points that's 0.75 percent the e t h e

that's the ethereum version of this from

the grayscale Bitcoin trust from that

same company right from grayscale they

charge the two and a half percent and

what's remarkable about this is not only

is this company making massive amounts

of money off of these two funds we're

talking 300 million dollars in fees just

from the grayscale Bitcoin trust and the

ethereum trust those two are making a

massive amount of money for this company

not only are they charging two percent

and two and a half percent but because

they're trading at a discount if you

adjust it for the discount account the

fee that they're earning would be much

more like 3.6 to 4.5 percent Bloomberg

did the math on that Bloomberg thinks

that this is way way too profitable of

an Enterprise to go bankrupt

now Bloomberg also did a little bit more

deep diving because there's a rumor

going on that this company if they were

to liquidate would just give people BTC

back that's not true though they would

actually give you cash back on

Redemption why does that matter because

it means that Bitcoin would have to be

sold there are a lot of people trying to

suggest don't worry if grayscale Bitcoin

trust goes under they'll just give you

BTC and that doesn't necessarily mean

it'll sell or or be sold on the market

because some people will hoddle it but

no the way the documents are aligned and

according to Bloomberg so argue it with

them if you don't agree with them

you get cash back on Redemption

but there's actually no real shareholder

Liquidation option anymore there was in

2017 where 75 percent of shareholders

could just vote to liquidate the mutual

fund but that was removed in recent

filings as recently as 2019 those sorts

of options were actually removed so then

why would the grayscale Bitcoin trust be

selling for such a massive discount well

there are a few reasons one it's

probably the biggest one is just limited

liquidity when you have companies like

block by dumping a bunch of gbtc you're

going to push the value of gbtc shares

down and Lead it to potentially sell for

a discount will the Gap close well this

depends on what you think about Bitcoin

is Bitcoin going to Rally again and does

Bitcoin have a long-term future in such

a case investing in gbtc could be a very

lucrative option of course this is not

Financial advice for you and even though

I'm a person I am a financial advisor

ultimately you have to make your own

decision in terms of what risk you

assign to bitcoin but limited liquidity

is probably one of the big reasons we're

seeing the grayscale Bitcoin trust sell

for such a discount as well as the fact

that there's there's been a lot of

competition for these sorts of mutual

funds and the hope that the grayscale

Bitcoin trust ever actually becomes a

real ETF which is a lot less likely now

after all of this FTX drama and the SEC

is probably going to go yeah we're

definitely waiting on a on a you know

Bitcoin ETF now well now you're probably

going to be waiting a lot longer so if

you've got a long game for Bitcoin and

you've got a lot of patience and you're

really bullish on the future of Bitcoin

yeah maybe there's an opportunity to

make money in the gbtc you're going to

be paying fees for this but that

discount is really really juicy now

personally

I now this is just my opinion okay

people get chastised for making an

opinion but I think it's a one that has

Merit

I think it might make sense to

potentially wait for any of the last

shoes to drop following the FTX collapse

and I really think that every morning I

wake up that Sam bankman free I wish it

was never associated with that company

I'm so sorry about that

every day that guy is not in prison is a

day that that means we have more shoes

to potentially drop

and that makes me wonder okay could that

discount on jbtc widen and is it

possible that ethereum and BTC will

continue to Trend down until all the

shoes have officially dropped and is

then potentially the opportunity of

course timing the market is very very

challenging and generally not super

lucrative so if you have a really

long-term Outlook maybe gbt is an option

but then again remember folks a lot of

companies are going bankrupt is it

possible that gbtc goes bankrupt totally

is it likely probably not they're making

a whole lot of money and honestly they

make the money whether or not their

trust sells at a discount or not they're

still making a lot of money even if they

were just making 100 million dollars in

fees instead of 300 million dollars in

fees a year it's still a lot of

essentially

I mean I don't want to insult them but

passive income okay so I think the odds

of this one go on BK very very low is

there a lot of fear and uncertainty and

doubt around that potential yes and if

they do liquidate they'll probably have

to dump their BTC of course none of

these are guarantees and none of this is

personalized Financial advice for you

my thinking is everything we've just

described here is extremely speculative

and generally

I think spec should probably have less

than a five percent position in

someone's portfolio but again I cannot

provide guidance on what your allocation

should be because I don't know what your

situation is so think about that

yourself as sort of Education if it was

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goodbye