Speaker 1: Hello, and welcome to another episode of the Markmas Show
Speaker 1: where we talk about the decentralized revolution the world is
Speaker 1: going through. We're talking about bitcoin, We're talking about cryptocurrencies.
Speaker 1: I'm trying to keep you up to date on how
Speaker 1: this world is changing, looking at it through the lens
Speaker 1: of politics, looking at through the lens of finance, and
Speaker 1: of course technology, as those three come together on a
Speaker 1: collision course. Now politics, finance and technology. Of course politics
Speaker 1: and finance go together. You know, the old days of
Speaker 1: you of being a financial analyst means how I would
Speaker 1: look at data like economic data, I would look at
Speaker 1: financial numbers. Unfortunately, today it's mostly politically driven. We're all
Speaker 1: trying to guess what the Federal Reserve, what Jerome Powell
Speaker 1: is going to do, what's in his head, and it's
Speaker 1: mostly politically motivated. There's mid terms coming up. What will
Speaker 1: they do before the mid terms? Are you know which
Speaker 1: president are they going for? Uh? And then even even
Speaker 1: when we get into the more of the financial system,
Speaker 1: like the SEC secure these Exchange Commission being headed by
Speaker 1: someone named Gary Gensler and his decisions are very politically motivated.
Speaker 1: So we have to look at the political side to
Speaker 1: understand what's going on there, so then we can understand
Speaker 1: what effects that will have on the financial system. And
Speaker 1: of course UM technology is what changes everything, and so
Speaker 1: that's kind of where we're at today. We're looking at
Speaker 1: the head of that and there's big news because the
Speaker 1: head of the SEC just made a big decision this week.
Speaker 1: As a matter of fact, there was two really big
Speaker 1: things that the head of the SEC said this week.
Speaker 1: The SEC um you know, it's a small or a
Speaker 1: small ish organization inside the government, but if you're an investor, uh,
Speaker 1: if you're involved in money and finance, and they're very
Speaker 1: very powerful, very big organization. And so the SEC Securities
Speaker 1: Exchange Commission are basically there to keep you safe, supposedly,
Speaker 1: so everything they do is trying to keep you safe.
Speaker 1: They're trying to prevent companies from scamming you and it
Speaker 1: been you off and things like that. UM but of
Speaker 1: course it doesn't really work out that way. So, for example,
Speaker 1: the SEC puts rules into place like accredited investor laws
Speaker 1: for example, So an accredited investor means that in order
Speaker 1: to get into like the really really good deals, like
Speaker 1: the private money deals where you can make huge returns
Speaker 1: on your money, In order to get into those types
Speaker 1: of deals, you have to be what's known as an
Speaker 1: accredited investor, and that means that you have to make
Speaker 1: over a certain amount of income. Um, you have to
Speaker 1: have an over a certain amount of assets, which means
Speaker 1: you basically are in like the top, I don't know
Speaker 1: one percent of of of people in the United States
Speaker 1: when it comes to income. Let's see what the updated
Speaker 1: accredited investment numbers are here. Requirements for credit investors. Okay,
Speaker 1: I must have an annual income exceeding two hundred dollars
Speaker 1: or three thousand for joint income for the last two years,
Speaker 1: with the expectation of earning the same or higher income
Speaker 1: in the current year. So you have to make at
Speaker 1: least two hundred thousand or three hundred thousand jointly and
Speaker 1: be making more. You could also be considering a credit
Speaker 1: investor if you have a net worth exceeding one million,
Speaker 1: either individually or jointly with their spouse. UM, but I
Speaker 1: believe that cannot include your private residence. So you have
Speaker 1: to have a million dollars of assets. So that's so
Speaker 1: your credit investor. So you can't get into the very
Speaker 1: best deals, the really really good deals. The private deals,
Speaker 1: the ones that make a lot of money unless you're
Speaker 1: a credit investor. Now what happens is because of that,
Speaker 1: it keeps the average person out. And then the insiders,
Speaker 1: the rich people, they get into all those early round deals,
Speaker 1: they get into venture capital, they get early round steaks
Speaker 1: into the Tesla's and the facebooks and the ubers. And
Speaker 1: then when the company runs for a decade and it
Speaker 1: goes public. As soon as it goes public, then the
Speaker 1: average person can go buy that stock. And then what happens, Well,
Speaker 1: those vcs that got in really early, they dump it
Speaker 1: on you. So typically once uh I p O s
Speaker 1: happened um in national public offerings and the stock goes
Speaker 1: public where the average person, the non acredit investor can
Speaker 1: get it, well, they get dumped on and the price
Speaker 1: typically goes down. So good job SEC protecting everybody. Um,
Speaker 1: do we have a applause? I think we have an applause? There.
Speaker 1: Let's see here. I'm not good with my sound effects,
Speaker 1: will try to get better at it. There we go.
Speaker 1: Good job, SEC, Good job. I appreciate all the work
Speaker 1: that you've done protecting all those non acredit investors. So, um,
Speaker 1: you know, like I've said, many times before. Of course,
Speaker 1: those non acredit investors, they're they're not smart enough to
Speaker 1: manage their own money. Never mind they made it, but
Speaker 1: they're not smart enough to manage it. But there is
Speaker 1: no protections on buying lottery tickets, are going gambling a casino, um.
Speaker 1: But anyway, back to the SEC, that's what they're to protect.
Speaker 1: And so the SEC wants to protect us from ourselves,
Speaker 1: and we've been waiting on them to do a lot
Speaker 1: of regulations on what they consider cryptocurrencies and how we
Speaker 1: regular cryptocurrencies. Now. Gary Gensler, he took over the SEC,
Speaker 1: I don't know, maybe the last year or two. I
Speaker 1: forget exactly when he came in, and everybody in the
Speaker 1: crypto space was pretty hopeful of having Gary Ginser come
Speaker 1: in because Gary gains Are understands bitcoin and cryptocurrencies very well.
Speaker 1: As a matter of fact, Gensler taught courses on bitcoin
Speaker 1: at m I T. If you're not familiar with the
Speaker 1: m I T. It's one of the most prestigious schools
Speaker 1: when it comes to science and technology. So he's at
Speaker 1: the most prestigious school for science and technology and he's
Speaker 1: teaching classes on bitcoin like he gets it very very well,
Speaker 1: he's a proponent of it. He was Why was he
Speaker 1: teaching people about it because he wanted them to know.
Speaker 1: He wanted to advance it. So he got it, and
Speaker 1: we thought that'd be really good. But of course he
Speaker 1: hasn't been so good. Maybe for more political reasons. We
Speaker 1: can talk about that. But um, this week seces Gary
Speaker 1: Ginsler reiterated that bitcoin alone is a commodity. What does
Speaker 1: that mean, Well, most cryptocurrencies are what they consider an
Speaker 1: unregistered or an unlicensed security. Now, companies that create unlicensed
Speaker 1: securities or sell unlicensed securities, or people that talk about
Speaker 1: buying unlicensed or unregistered securities could get in a lot
Speaker 1: of trouble. As a matter of fact, we've seen many
Speaker 1: celebrities actually get in trouble with fines and lawsuits for
Speaker 1: talking about cryptocurrencies. They're getting paid to promote them, the
Speaker 1: Paris Hilton's or the a cons um they get paid
Speaker 1: to promote it, talk about it publicly, but it's an
Speaker 1: unregistered security and they've gotten in trouble for it. And
Speaker 1: so a lot of talk has been what what's unregistered securities?
Speaker 1: What's not? But that your U S Securities and Exchange
Speaker 1: Commissioner Gary Ginsler has reiterated his claim that bitcoin is
Speaker 1: a commodity. Um some quote some like bitcoin and that's
Speaker 1: the only one, Jim, I'm going to say, because I'm
Speaker 1: not going to talk about any of these tokens that
Speaker 1: my predecessors and others have said are a commodity, Gainsler
Speaker 1: said an interview with CNBC's Jim Kramer on Monday. Some
Speaker 1: like bitcoin and that's the only one. That's what he said.
Speaker 1: Now again, Uh, this is a departure from his predecessors
Speaker 1: and his unwillingness to define Ethereum as the same way.
Speaker 1: So his predecessor said the theorium maybe he said for
Speaker 1: sure it was a security, but it could have converted
Speaker 1: into a commodity, is what they said before. Um, But
Speaker 1: now Gainsler's like, nope, Um, I'm the only one that
Speaker 1: I see it is that he says. Uh. He said
Speaker 1: crypto financial assets have the key attributes of a security,
Speaker 1: he said recently, noting there's always almost a centralized entity
Speaker 1: that directs projects and stands to profit the most. That
Speaker 1: was certainly the case when the Ethereum blockchain fit first
Speaker 1: burst onto the scene with an initial coin offering. A
Speaker 1: motley crew of builders and investors and institutions such as
Speaker 1: the Ethereum Foundation. So but then in sec director um
Speaker 1: set Ethereum might be able to have reached the level
Speaker 1: of a commodity, but Gary Ginsler doesn't think so, which
Speaker 1: is pretty interesting. Um. Now this goes back to what
Speaker 1: I've been saying, which is, um, the real revolution. There's
Speaker 1: a technological revolution happening here today, and most people are
Speaker 1: completely blind to it because of cryptocurrency are blocking that.
Speaker 1: But there's a real revolution happy today. The real revolution
Speaker 1: is d centralization. That's the real revolution here. Now, per
Speaker 1: the words of the SEC right here, it says that
Speaker 1: says crypto financial assets are security. Um, they're always almost
Speaker 1: a centralizing see that REX projects and stands to profit,
Speaker 1: so they're not decentralized. The revolution is decentralization. Most cryptoists
Speaker 1: aren't anything but bitcoin. That's Gary Gunzo's word, is not mine.
Speaker 1: I got a lot more to cover, including a really
Speaker 1: big ruling that they made this week and it fired
Speaker 1: off a lawsuit. We're gonna see massive fireworks happening. You
Speaker 1: don't want to miss what I'm about to talk about.
Speaker 1: In a second. You're listening to the Markma show. UM
Speaker 1: talking about bitcoin and cryptocurrencies. I'll be back with more
Speaker 1: in a minute. Don't go away, all right, Welcome back.
Speaker 1: You're listening to the Markma Show. We're talking about the
Speaker 1: decentralized revolution that's happening bitcoin, cryptocurrencies, the way the world
Speaker 1: is changing, politics, finance, all of that. Now. I call
Speaker 1: it the decentralized revolution because that's the revolution from from
Speaker 1: many standpoints. On a two and a fifty year time frame,
Speaker 1: a pendulum swings back in the world, swings to centralization
Speaker 1: or globalization, and we're peeking out right now, and then
Speaker 1: the pendulum swings back the other way to decentralization. At
Speaker 1: the very same time, we have a technological revolution that's
Speaker 1: happening on a fifty year time frame. And the technology
Speaker 1: revolution that's happening right now is giving us a new
Speaker 1: technology that gives us decentralization. That is the revolution. Now,
Speaker 1: that's why I called this. What we talked about is
Speaker 1: the decentralized revolution. Talking about the way the world is
Speaker 1: decentralizing from a political standpoint, from a geopolitical standpoint, from
Speaker 1: an energy commodity standpoint, and of course it's all being
Speaker 1: led by the changing of the money. Now I make
Speaker 1: that point to tell you that that's the revolution. And
Speaker 1: Gary Gensler, the head of the SEC basically said as much, UM,
Speaker 1: saying that only bitcoin is a commodity. All the rest
Speaker 1: appeared to be some sort of security because of the centralization.
Speaker 1: There's always, in his words, almost always a centralized entity
Speaker 1: that directs projects and stands to profit the most. Um.
Speaker 1: It was it's the case with ethereum. Um blah blah blah.
Speaker 1: I'm not going to read all that again, um O.
Speaker 1: G bitcoin er Jamison Lob for instance, made distinction recently
Speaker 1: saying most cryptos are decentralized in name only or dinos.
Speaker 1: I hadn't heard that term before, dinos, but I like it.
Speaker 1: Shout out to Jamison Lop and likely Unregistered Securities micro
Speaker 1: Strategy CEO Michael Sailor called for cryptos quote parade of
Speaker 1: horrible to be stamped out by regulators now, um. Shout
Speaker 1: out to Michael Sailor. UM. I don't necessarily agree with them.
Speaker 1: You know, I'm not a big fan of regulations. Let
Speaker 1: people do what they want, in my opinion, but they
Speaker 1: should know what they're doing. Now. There is something about
Speaker 1: a fraud, so if or a scam, if I were
Speaker 1: to say that I was going to sell you one thing,
Speaker 1: but I delivered you something else. That would be fraud
Speaker 1: or that would be a scam, and there there are
Speaker 1: laws against that. And so if I were to sell
Speaker 1: you a token and tell you that it was a
Speaker 1: decentralized protocol but it wasn't, that would be a fraud
Speaker 1: or a scam, and so that should be illegal, and uh,
Speaker 1: you know, for them to be stamped out by regulators,
Speaker 1: I suppose the regular I should say, hey, you guys
Speaker 1: are actively purpetating frauds and scams. You're selling things that
Speaker 1: you promise are something but they're not UM. So I
Speaker 1: suppose there could be something there for that UM. In
Speaker 1: Sailor's world, the government stamp up approval of stepping stone
Speaker 1: towards Bitcoin being embraces a Treasury reserve asset UM. But
Speaker 1: that's not the big news that I want to talk about.
Speaker 1: The big news that I want to talk about is
Speaker 1: uh gray scale. Now. You might have heard of gray
Speaker 1: scale before. If you haven't, you certainly are going to
Speaker 1: hear about it now because gray scale gray scale was
Speaker 1: like really the first way that allowed people to buy
Speaker 1: bitcoin UM through like a four oh one K or
Speaker 1: a mutual fund or if you're like a big fund.
Speaker 1: It was the first way you could buy it through
Speaker 1: a financial product as opposed to buying it directly. Now
Speaker 1: why would you need that? Well, the average person, you
Speaker 1: and I wouldn't. But if you had money in an
Speaker 1: I RA A or in a four oh one K,
Speaker 1: or if you ran some sort of a fund, then
Speaker 1: you're not able to go buy bitcoin, all right, not
Speaker 1: a security. And so they created a fund like an
Speaker 1: e t F, not an e t F and we're
Speaker 1: gonna talk about that, but similar to that that allows
Speaker 1: you to buy it through those those types of vehicles.
Speaker 1: So it was the it was the first way to
Speaker 1: get ahold of bitcoin that way. Now they haven't. It's
Speaker 1: not an e t F and that's the crux of
Speaker 1: the matter that we're gonna talk about today. But um,
Speaker 1: gray Scale created something else UM not a not a
Speaker 1: E t F UM, but but but something like that,
Speaker 1: UM that that allowed people to get access to it.
Speaker 1: But of course gray Scale and a lot of other
Speaker 1: people want to create a bitcoin e t F and
Speaker 1: exchange traded fund. Gray Scale is more like a close
Speaker 1: end fund. And I'll explain to you what the difference
Speaker 1: is But so, um, Gary Ginsler at the SEC has
Speaker 1: been approving bitcoin e t fs, but they're not the
Speaker 1: right type of e t f s. What do I
Speaker 1: mean by that? So? Um, you have an e t
Speaker 1: F that's cash settled, or futures that are cash settled,
Speaker 1: or an e t F that tracks the price of
Speaker 1: the asset, and then you have one that's physical that
Speaker 1: actually holds the asset. One allows you to basically bet
Speaker 1: on the price going up or down, and one actually
Speaker 1: holds the asset to go up or down. Now, for me,
Speaker 1: I don't believe in all this manipulation and all this
Speaker 1: leverage and all this other garbage out there. I think
Speaker 1: the laws of supply and demand, if all these funds
Speaker 1: bought bitcoin, they would take the supply off the market,
Speaker 1: it would increase the demand, and it would push the
Speaker 1: price up. But when you create these e t f
Speaker 1: that allow people to just basically gamble on the price
Speaker 1: instead of putting the money into bitcoin and buying bitcoin,
Speaker 1: now they're just gambling on the price of bitcoin. So
Speaker 1: Gary Ginsler seems to think that's okay. He seems to
Speaker 1: have approved several of those, but he won't approve a
Speaker 1: physical e t F why. I don't really know. Um.
Speaker 1: I guess I could speculate, but I don't want to
Speaker 1: do that right now. I'm not really sure why he doesn't,
Speaker 1: but UM, he certainly gets bitcoin, and I don't know
Speaker 1: why he would do that. So anyway, gray Scale, I'm
Speaker 1: gonna talk about gray Scale. UM, what this close in
Speaker 1: fund means. Why it's in a massive discount to physical bitcoin.
Speaker 1: We can look at it, maybe you should buy it
Speaker 1: or not, um at a discount like it is right now.
Speaker 1: But they want to convert their clothes in fund into
Speaker 1: an e t F, which is an exchange traded fund.
Speaker 1: I think would be best for them if they did that.
Speaker 1: I think would be best for all their shareholders if
Speaker 1: they did that. I think it'd be best for the
Speaker 1: marketplace if they did that. Um. And so they want
Speaker 1: to do that, and uh. The SEC rejected gray Scales
Speaker 1: application to convert its gray Scale Bitcoin trust to an
Speaker 1: exchange traded fund this week, and so in response to
Speaker 1: that Gray Scale Investments file, they lawsuit against the U
Speaker 1: S Securities and Exchange Commission an hour after the regulatory
Speaker 1: agency rejected its application. So there was already word on
Speaker 1: the street that Gray Scale was pretty ready to file lawsuit.
Speaker 1: They were already kind of preparing to get a denied application,
Speaker 1: and so as soon as it was done, it stays here.
Speaker 1: An hour afterwards they had filed the lawsuit application. Um
Speaker 1: they the SEC rejected a citing concerns about the market manipulation,
Speaker 1: the role of tether and the broader bitcoin ecosystem, and
Speaker 1: they lack of surveillance sharing agreement between regulated market of
Speaker 1: significant size. So they're concerned about market manipulation. What do
Speaker 1: futures and ETFs that don't even own the asset do.
Speaker 1: The only thing they do is manipulate the price. So
Speaker 1: instead of buying the asset and leveraging it to short it,
Speaker 1: now I can just bet against it. It's called like
Speaker 1: naked shorting. I don't even have to own the asset.
Speaker 1: I can just bet that it goes down. Those are
Speaker 1: used to manipulate the prices. Look at gold, we don't
Speaker 1: really know and somewhere between three to five hundred paper
Speaker 1: ounces fake ounces for everyone, real physical ounce, and all
Speaker 1: that fake paper gold is used to manipulate the price
Speaker 1: of bitcoin down. So Gary Ginsler says, hey, we're not
Speaker 1: going to prove the physical because it could be used
Speaker 1: for market manipulation. No, no, no, no no, it's the
Speaker 1: fake ones that create the market manipulation. I think everybody
Speaker 1: already knows that. So anyway, that's why he exposed it,
Speaker 1: or I should say, rejected it, and gray Scale is
Speaker 1: gonna sue. Let's take a look at what the Gray
Speaker 1: Scale trust is, why it's so severely undervalued you can
Speaker 1: buy bitcoin, had a huge discount in their fund. We're
Speaker 1: gonna look at that, look at the fees involved, look
Speaker 1: at the chance of you get into your full money
Speaker 1: out of it, and so much more. In a minute.
Speaker 1: You're listening to the Market Mo Show. We're talking about
Speaker 1: the decentralized revolution, talking about bitcoin, cryptocurrencies and the way
Speaker 1: the world is changing in front of our very eyes
Speaker 1: through business, politics, finance, and technology. So I got a
Speaker 1: lot more to cover with the g BTC bitcoin trust,
Speaker 1: the discount and more when I come back in a minute.
Speaker 1: So don't go away, all right, welcome back. You are
Speaker 1: listening to the Markmas Show. We're talking about the decentralized revolution.
Speaker 1: We're talking about the world changing through a lot of
Speaker 1: crazy things. It's it's interesting as as the world change
Speaker 1: has this pendulum swings back, we get the volatility, and
Speaker 1: I think that's the best way to explain what we're
Speaker 1: what we're witnessing. And so we're talking about, uh, specifically,
Speaker 1: we're talking about the SEC Securities Exchange Commission. The head,
Speaker 1: Gary Ginsler, he knows bitcoin very well. He said this
Speaker 1: week on Jim Kramer that bitcoin is the only commodity
Speaker 1: the rest our securities. But then he went around and
Speaker 1: denied the request of Gray Scale Bitcoin Trust to convert
Speaker 1: that trust into an e t F. So I want
Speaker 1: to talk about that now. If you missed the first
Speaker 1: part of this and you're just tuning in, no worries, Uh,
Speaker 1: just don't let it happen again, of course, and the
Speaker 1: way you can do that is pull out your phone
Speaker 1: right now. But a reminder for this date, at this time,
Speaker 1: this channel. Make sure you're with me each every week.
Speaker 1: And if you did miss it, don't worry about it.
Speaker 1: I got you covered. You can just search Mark Moss
Speaker 1: podcast and you can catch me over there. Now back
Speaker 1: to what happened, Like I said, the SEC rejecting this um,
Speaker 1: he said that Gary gains SEC said that he wanted, uh,
Speaker 1: he wants to protect us because he wants to make
Speaker 1: sure there's better protection, so there's no market manipulation going on.
Speaker 1: But the market manipulation, as I was making the case,
Speaker 1: is brought on by people betting against the price without
Speaker 1: actually buying the asset itself. Allah Gold. Let's break into
Speaker 1: this a little bit now, GBTC Gray scales Bitcoin Trust
Speaker 1: it trade that a discount to nav in a VY.
Speaker 1: What does that mean in a v's is a net
Speaker 1: asset valuation, So that means that the assets that they hold,
Speaker 1: So that means that you could buy the Bitcoin trust
Speaker 1: for less then the assets that it's holding on its books. Now,
Speaker 1: why would you be able to buy a fund for
Speaker 1: less than their net asset valuation. We're gonna take a
Speaker 1: look at that. But what they're trying to do is
Speaker 1: convert this trust into an e t F, which would
Speaker 1: then really solve the problem. So it's trading at a
Speaker 1: discount because there's some problems. We're gonna dig into those problems,
Speaker 1: and if they could convert it to this e t F,
Speaker 1: it would solve the problem of this discount. Why it's
Speaker 1: trading for less than its market value? Now, like I
Speaker 1: was saying before, it's an e t F as an
Speaker 1: exchange trade fund, grad scale operates as a close in fund,
Speaker 1: and what that means is the new shares can't be
Speaker 1: created and redeemed um in line with fluctuating demand. All right,
Speaker 1: that's how an e t F functions. So an e
Speaker 1: t F, basically every dollar in would go to buy
Speaker 1: more bitcoin, and when you take a dollar out, they
Speaker 1: sell it a dollar bitcoin. But a close in fund
Speaker 1: doesn't work that way. They don't buy and sell bitcoin
Speaker 1: in line with the demand um and the e t
Speaker 1: F they call that a redemption mechanism, and that's how
Speaker 1: you reconcile the difference between the NAB net asset valuation
Speaker 1: and what the market value is. And basically, like I said,
Speaker 1: that prevents shares of the e t F from trading
Speaker 1: at a discount, so it keeps the shares um in
Speaker 1: line with the price at all times. But like I said,
Speaker 1: the gray scale bitcoin trust is way down. As a
Speaker 1: matter of fact, you can buy it almost a thirty
Speaker 1: percent discount to their net asset valuation, which sounds like
Speaker 1: a bargain. And I know some very well known and
Speaker 1: respected investors that are buying at this discount. I'm not
Speaker 1: should you, Well, I don't know. Let's take a look
Speaker 1: at that, so it says this occurs because bitcoin was
Speaker 1: added to the fund as new investors demanded GBTC. As
Speaker 1: demand waned and g BTC was sold, Bitcoin was locked
Speaker 1: in the fund, but it wasn't sold at the same
Speaker 1: as demand wane, causing shares to trade lower than the
Speaker 1: net asset value of the trust. And what they're trying
Speaker 1: to do is that they can convert the trust into
Speaker 1: the e t F. It would close the discount and
Speaker 1: then allow the bitcoin to track the bitcoin price, and
Speaker 1: for the investors that are there would be a really
Speaker 1: good thing because then the investors would be able to
Speaker 1: get the appreciation of their holdings equal to the size
Speaker 1: of the discount, which means they would make a thirty
Speaker 1: percent spread. Sounds pretty good. That's why people were buying it,
Speaker 1: hoping that it would get approved and that it would
Speaker 1: get revalued and they would automatically make that thirty percent. Now,
Speaker 1: I would imagine the the the odd hads, the betting
Speaker 1: odds of it getting approved were probably pretty slim in
Speaker 1: my opinion. Anyway, I didn't expect it to happen because
Speaker 1: of course Gary Ginsler has denied every single one so far,
Speaker 1: and I don't see that happening anytime soon. Now, part
Speaker 1: of the problem with the Gray Scale Bitcoin Trust is
Speaker 1: that it's expensive. So what happens is that they automatically
Speaker 1: sell two percent of the fund every year as as
Speaker 1: their fee. So like a lot of funds, you have
Speaker 1: to pay a maintenance fee, so you're so basically for
Speaker 1: the amount of money you buy, they take two percent
Speaker 1: of your money every year to manage this fund for you.
Speaker 1: Now that's um right now, it's about thirty five bitcoin
Speaker 1: a day and they have almost six hundred and fifty
Speaker 1: thousand bitcoin, which is a massive number, which means that
Speaker 1: Gray Scale Bitcoin Trust holds about three per cent of
Speaker 1: all the bitcoin supply, which is pretty amazing. And that's
Speaker 1: in there. Another term, it's a u M, which stands
Speaker 1: for assets under management. Now there's other ways to buy
Speaker 1: bitcoin and ETFs, like I said, but they're not physically
Speaker 1: held bitcoin. So one is the pro shares Bitcoin ETF
Speaker 1: and they hold they hold the futures the bit in future,
Speaker 1: so again's just betting on the direction and they charge
Speaker 1: a much lower fee. So that's something that you want
Speaker 1: to look at when you're looking at these types of
Speaker 1: e t s. They all have different fees. They have
Speaker 1: different schedules, they recalculate, and it's that small print that
Speaker 1: can really get you if you don't know what you're
Speaker 1: what you're getting into. But Gray Scale, so so the
Speaker 1: pro schars bitcoinit you have, holds the futures. They're just
Speaker 1: holding bets, that's it. But Gray Scale actually holds bitcoin,
Speaker 1: which is good, which is why they wanted to convert
Speaker 1: into a physically hell because they already have the bitcoin.
Speaker 1: They have six fifty bitcoin um a u m ass
Speaker 1: under management. But what we can see when you look
Speaker 1: at their when you when you look at who owns
Speaker 1: all the GBTC, we can see that the largest holder
Speaker 1: of g BTC is Three Arrows Capital. Now, if you've
Speaker 1: been tuned into the other segments of the show, I've
Speaker 1: been talking about Three Arrows Capital three E C, three
Speaker 1: A C and how they're caught up in what I'm
Speaker 1: calling the Great Unwind. So Tera Luna went down and
Speaker 1: it starts dragging everyone else down with it. Then we
Speaker 1: saw Celsius go down. Now we're seeing Three Arrows Capital
Speaker 1: going down, et cetera. And Three Arrows Capital which just
Speaker 1: got just missed their payments, so they just got marked
Speaker 1: um in solvent. They're being liquidated. They're the largest holder
Speaker 1: of bitcoin inside the GBTC trust and that's the problem
Speaker 1: because as they're being liquidated, people need to get access
Speaker 1: to those assets, but those assets are held inside the
Speaker 1: trust and the trust isn't liquid. It's a big problem.
Speaker 1: They hold about thirty eight million shares equated to five
Speaker 1: thirty million dollars, or seventy five times the average daily
Speaker 1: traded volume of seven million dollars in GBTC, So that's
Speaker 1: seventy five times the average dated daily traded volume. So
Speaker 1: that means it's not liquid. How do you get five
Speaker 1: million dollars out of something that only trades seven million
Speaker 1: in a day And the answer is you don't, not
Speaker 1: very fast anyway. Now, the problem is is that Three
Speaker 1: Arrows Capital was ordered to liquidate all the remaining assets
Speaker 1: they're being liquidated and they can't meet the margin requirements
Speaker 1: they're being called. They were ordered by a cord in
Speaker 1: the British for an islands um to liquidate all the
Speaker 1: remaining assets totally an over a billion dollars, which is good,
Speaker 1: but the problem is that the gray scale Bitcoin Trust
Speaker 1: isn't liquid enough for Three Arrows Capital. Three a C
Speaker 1: to dump all its holdings. Um. Now they could try,
Speaker 1: it's not gonna go very good because it's not liquid enough.
Speaker 1: And if they did, that would lower the price of
Speaker 1: the of the of the trust and then it would
Speaker 1: cause the gap to grow even wider. So what's going
Speaker 1: to happen. Well, I'll talk about that and more. Talk
Speaker 1: about that pations of this e t F conversion. Uh,
Speaker 1: talk about some things that you need to know if
Speaker 1: you're a holder of the trust or if you're considering
Speaker 1: being a holder of the test trust. And then we'll
Speaker 1: look back a little bit more about the lawsuit that's
Speaker 1: going to happen if you the trust and the SEC.
Speaker 1: I'm gonna cover all that more in a minute. You're
Speaker 1: listening to the Mark Moas Show. We're talking about the
Speaker 1: decentralized revolution, talking about bitcoin, cryptocurrencies and the way the
Speaker 1: world's changing right before our very eyes. I got a
Speaker 1: lot more to cover when I come back in a minute,
Speaker 1: So don't go away, all right, Welcome back. You are
Speaker 1: listening to the markmas Show. We're talking about the decentralized revolution,
Speaker 1: talking about bitcoin and cryptocurrencies, talking about the financial system,
Speaker 1: the markets, you know, all those things that really matter
Speaker 1: to your life. I was talking about specifically, we're talking
Speaker 1: about bitcoin. We're talking about this gray scale Bitcoin trust,
Speaker 1: talking about how the head of the sec, Gary Ginsler,
Speaker 1: denied their application to convert the trust into an e
Speaker 1: t F. We broke down what that means, what the
Speaker 1: e t F is, what the trust is, how it works,
Speaker 1: what the discounts are, what NAVY is, what a u
Speaker 1: M is. If you missed any of that, I feel
Speaker 1: bad for you, but don't worry. You can go listen
Speaker 1: to it on the Mark Moss podcast. Just google that
Speaker 1: UM or just search on your favorite podcast player. Now.
Speaker 1: I was talking about before the break, how the problem
Speaker 1: is is that UM, this great unwind, all these funds
Speaker 1: domino into each other, are creating this problem, and how
Speaker 1: UM the b v I British Virgin Islands UM ordered
Speaker 1: throughous capital to liquidate all the remaining assets. The problem
Speaker 1: is they have about five million dollars worth of UM
Speaker 1: assets or bitcoin on the trust, but the trust only
Speaker 1: seven million dollars a day. It's not it's not a
Speaker 1: good problem. It's not a good problem to have. And
Speaker 1: what happens is if they forced that liquidation to happen,
Speaker 1: it's gonna push GBTC, the grace coalpic coin trust further
Speaker 1: down and widen out the spreads, which isn't good. So
Speaker 1: in the coming you know whatever, several weeks looking forward,
Speaker 1: as they start liquid a it's remaining gray scale bitcoin trust,
Speaker 1: I think we're going to see the um the gap widen.
Speaker 1: I mean, there's just no other way right um there's
Speaker 1: just not a liquid enough market for that to happen,
Speaker 1: and so I think we're going to continue to see
Speaker 1: that nav play out now. Like I said, I have
Speaker 1: known a few well known investors who have been buying
Speaker 1: into this hoping that the spread would go the other way,
Speaker 1: but it looks like the spread is probably going to
Speaker 1: continue to widen at this point now. Like I said,
Speaker 1: if they could have converted the trust into an e
Speaker 1: t F, it would eliminate that discount and everybody would
Speaker 1: have made money, which would have been great, but it's
Speaker 1: just not happening right now now. If you're a holder
Speaker 1: of of of the trust GBTC, a couple of things
Speaker 1: you just know. One, you can't convert your GBTC into
Speaker 1: bitcoin directly, so that means you can't self custody it now.
Speaker 1: Part of the reason why I don't think we need
Speaker 1: a physical bitcoin trust is because I don't need a
Speaker 1: trust to buy or an e t F to buy bitcoin.
Speaker 1: I can just buy bitcoin myself. That's part of the
Speaker 1: whole revolution here. I can buy the asset, I can
Speaker 1: custody of my own in my hardware wallet. I don't
Speaker 1: need someone to hold it for me. Now, futures and
Speaker 1: ETFs were created as a way to buy or have
Speaker 1: access to assets that I can't hold. So, for example,
Speaker 1: futures were started by farmers, and they're trying to hedge
Speaker 1: their crop. Hey, I'm growing this corn or this weed
Speaker 1: or whatever it is, and what if what if, you know,
Speaker 1: hurricane comes or some sort of drought comes and I
Speaker 1: lose all my crop. So what I'll do is I'll
Speaker 1: sell it on the futures market today, and that way,
Speaker 1: if whatever happens, I'm hedged. Right. Also, as an investor,
Speaker 1: how do I invest into wheat or corn or oil?
Speaker 1: I don't I don't have giant oil tankers, And so
Speaker 1: I could invest into it by helping these farmers with
Speaker 1: these producers offset by using some sort of a fund
Speaker 1: and e t F. So that's good. Even gold, I
Speaker 1: mean gold is pretty easy to custody. But if I'm buying,
Speaker 1: you know, millions of dollars or hundreds of millions of
Speaker 1: dollars of gold, it's not easy to custody that amount.
Speaker 1: And so, and I can buy it through some sort
Speaker 1: of an E t F or something like that. But
Speaker 1: Bitcoin is different. Bitcoin is very easy to hold. I
Speaker 1: don't need anyone to secure it for me. It's digital.
Speaker 1: All I need to know is my password. That's it.
Speaker 1: And I can hold a dollar of bitcoin or a
Speaker 1: hundred billion dollars of bitcoin with just one password, and
Speaker 1: so we don't need futures, we don't need some sort
Speaker 1: of a fun to do that like we do with wheat,
Speaker 1: corn oil, et cetera. So anyway, you can't custody your
Speaker 1: g BTC as you would with with bitcoin directly, which
Speaker 1: then creates counterparty risk. That means now I have to
Speaker 1: trust gray Scale to hold that for me, and I
Speaker 1: don't know what that risk is. It could be very small,
Speaker 1: but it's still risk that I have to add in there.
Speaker 1: Um And in case of gray Scale going and solvent Um,
Speaker 1: if they were to go bell YEP, I could potentially
Speaker 1: lose it. So I've talked about this great unwind, and
Speaker 1: we saw that the dominoes are fall into bigger and
Speaker 1: bigger people. And now it's at Genesis door. And Genesis
Speaker 1: is owned by the same company d c G that
Speaker 1: also owns the Great Scale Bitcoin Trust. Now, I'm not
Speaker 1: trying to say that there's a panic or or danger
Speaker 1: going on here, but if something were to happen, it
Speaker 1: creates that counterparty risk. Now, if you do own the
Speaker 1: trust and you're you know, upside down, your upside down, Um,
Speaker 1: you know I wouldn't panic. Um, you can probably continue
Speaker 1: to hold on. I think, um, I think you know
Speaker 1: they're gonna keep They're in a lawsuit right now, they're
Speaker 1: going to try to get this e t F through.
Speaker 1: If they get that e t F through and maybe
Speaker 1: takes another year, maybe it takes two years, but they
Speaker 1: could close that gap up. Now if you uh, you know,
Speaker 1: like I said, if you're if you're hoping to buy
Speaker 1: it at a discount, maybe it goes down. Maybe maybe
Speaker 1: we see three arrows capital liquid eate push that price
Speaker 1: down to that gap widens. Maybe you buy it at
Speaker 1: a thirty forty fifty percent discount, and you can afford
Speaker 1: to wait two years or years and see if this
Speaker 1: gets closed up, maybe it could be a good deal.
Speaker 1: Those are ways to look at it. Now back to
Speaker 1: the sec Gary Ginsler, uh man, I mean he gets
Speaker 1: this right, he gets bitcoin, he taught it at M
Speaker 1: I t again, I don't I don't really want to speculate,
Speaker 1: but I just don't know why he's rejecting all these
Speaker 1: spots or physical et fs when he's approving the derivatives
Speaker 1: ones when he says that he wants he doesn't want
Speaker 1: to prove the spot because of potential manipulation. But it's
Speaker 1: the derivatives that cause all the manipulation. I just don't
Speaker 1: understand that. But like I said, Gray scal was already
Speaker 1: they were already anticipating this being denied, and so they
Speaker 1: already had a lawsuit prepared and ready to go. So
Speaker 1: immediately Gray Scout followed the lawsuit. But I don't expect
Speaker 1: this to happen anytime soon. Um. They're suing an inept
Speaker 1: and incompetent government, um, And it could take years. I mean,
Speaker 1: we could see a year or two before we see
Speaker 1: anything come out of this, probably you know, most likely
Speaker 1: or something like that we see. UM, So don't hold
Speaker 1: your breath. But if you bought bitcoin. Let's say that
Speaker 1: Let's say that three rows capital has to liquidate. Let's
Speaker 1: say it forces that spread to be wider. Right now,
Speaker 1: it's you buy it, you wait two years UM, and
Speaker 1: then by then, hopefully bitcoins back to a higher price.
Speaker 1: We're having having having any cycle at that time. So
Speaker 1: let's say bitcoins a it goes up to fifty UM.
Speaker 1: So bitcoin has doubled, they're tripled in value, and you
Speaker 1: get to close the gap. At the same time, it
Speaker 1: could turbo charge your investments. Um. You just have to
Speaker 1: decide if that's a risk you want to take and
Speaker 1: if you're okay waiting that time frame for it. But um,
Speaker 1: the other thing is, not only is it gonna take
Speaker 1: a lot of time, it's also going to cost a
Speaker 1: lot of money. The gray skial is gonna have to
Speaker 1: spend a lot of time. But it's also going to
Speaker 1: spend a lot of money on it. And even if
Speaker 1: they do sue, sue the sec they go through this
Speaker 1: for a couple of years and they spend all the money,
Speaker 1: the chance of winning is probably slim to none. Well,
Speaker 1: I don't want to say none, but I'd say it's slim.
Speaker 1: Suing the government probably doesn't have a very high probability
Speaker 1: of winning. I know and I know a few people
Speaker 1: who have actually had to defend themselves from the SEC
Speaker 1: and uh, you don't win, you don't win. As a
Speaker 1: matter of fact. Um, somebody an associate that I knew
Speaker 1: before I worked with in the past, they were under
Speaker 1: SEC lawsuits and they were told in the back office like, hey,
Speaker 1: we don't lose, so just give us something and we'll
Speaker 1: we'll we'll end this. So um, the chance of them
Speaker 1: winning is probably very slim, but it could happen. But
Speaker 1: like I said, there's been I want to say, at
Speaker 1: least five, if not six or seven or eight, at
Speaker 1: least five I know e t s that have been
Speaker 1: denied by the SEC so far. And we'll see what happens.
Speaker 1: I don't know if it's going to get approved or not.
Speaker 1: But that all part of being an investor. You get
Speaker 1: to understand the situation. As I've explained to you. You
Speaker 1: can understand what the risks and rewards are, the time frames,
Speaker 1: and then you can decide if that makes sense for
Speaker 1: you or not. And I'd love to hear what you
Speaker 1: have to say, so hit me up on social media
Speaker 1: at the number one Mark Moss just at one Mark Moss.
Speaker 1: You can find me on Instagram, on Twitter, let me
Speaker 1: know what you think. I'd love to hear it. And uh,
Speaker 1: if you just tune in, you listen to the Mark
Speaker 1: Moa show talking about the Decentralized Revolution, talking about bitcoin,
Speaker 1: talking about cryptocurrency, is talking about through the lens of politics, finance,
Speaker 1: and technology, so you can have a better sense, you
Speaker 1: can have more context to what the heck is going
Speaker 1: on in the world today. Hopefully that makes sense to
Speaker 1: Hopefully I'm making it easy to understand. Make sure to
Speaker 1: tune in with me each and every week on this channel.
Speaker 1: Check out my new website at one Mark Moss name
Speaker 1: as my social media handles. And if you missed any
Speaker 1: of this, you can catch it on the I Heart
Speaker 1: podcast network. Just go to your podcast player in search
Speaker 1: Mark Moss podcast. And that's what I got for you today, right,
Speaker 1: Thanks for listening. What's your next time?