ETFs gradually debut, Bitcoin will accelerate its march into the traditional world in 2021

On the evening of April 14th, the highly anticipatedCoinbase Officially Listed on Nasdaq, soared 70% at the opening, and the market value once approached the 100 billion US dollar mark. As the most eye-catching event in the industry since 2021, the listing of Coinbase is undoubtedly one of the biggest events in the encryption world in 2021.

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01. Will Bitcoin ETF usher in a wave of listing in 2021?

Since the Winklevoss brothers first opened the Bitcoin ETF in 2013, different institutions have applied for Bitcoin ETFs every year for 9 years, but without exception, they all ended in failure (or were rejected by the US SEC, or voluntarily revoked), or even failed. became a"By the spell of forever being next year"。

Finally, on February 18, 2021, this "curse" was broken by Canada's Purpose Investment Company, which launched the world's first Bitcoin ETF - Purpose Bitcoin ETF, which was listed on the Toronto Stock Exchange and sold on the first day of issuance The volume reached nearly 400 million US dollars, which shows the market's expectations for Bitcoin ETF.

According to Glassnode data, as of April 10, 2021, the number of Bitcoins held by the Canadian Purpose Bitcoin ETF has reached 17,013, an astonishing growth rate.

And on the second day after the launch of the Purpose Bitcoin ETF, the Canadian asset management company Evolve Funds Group immediately launched the second Bitcoin ETF, but the most concerned by the market is undoubtedly the SEC’s application for the US Bitcoin ETF—— Following the approval of a series of Bitcoin ETFs in Canada, the number of applications for ETFs in the United States has also begun to show a significant upward trend recently.

Bitcoin ETFs from multiple financial companies, including VanEck, NYDIG, Valkyrie, Simplify, Anthony Scaramucci's hedge fund SkyBridge Capital, and Fidelity subsidiary FD Funds Management, are currently awaiting approval.

Grayscale previously confirmed in a document submitted to the SEC that it also intends to convert its Bitcoin Trust (GBTC) into a platform transaction fund (ETF). ".

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02. Where will the negative premium GBTC (quasi-bitcoin ETF) go?

However, to some extent, as a compliant trust institution to help investors manage encrypted assets, the Grayscale Bitcoin Trust (GBTC) in 2020 actually plays the role of a "quasi-Bitcoin ETF".

Because before 2020, the market generally expects that once the Bitcoin ETF is passed, it will completely open the way for traditional mainstream investors to invest in cryptocurrencies, and may promote Bitcoin and other large-scale acceptance by Wall Street, making encrypted asset allocation more widely recognized .

However, the repeated rejections during the period made the market’s expectations become numb in the midst of failure, and the sudden emergence of Grayscale in 2020 has essentially taken over the stick of “Bitcoin ETF”:

Grayscale’s asset management scale has grown from US$2.1 billion at the beginning of 2020, and it has exceeded US$20 billion by the end of 2020. It has increased tenfold in a year and has become an important brand-name whale in the encryption world. Equivalent to "quasi-bitcoin ETF".

As of April 16, the total asset management scale of Grayscale’s encrypted trust assets has reached 50.2 billion US dollars, which is about 40 times the size of the Purpose Bitcoin ETF.

Grayscale’s GBTC and other encrypted trusts can also be directly traded in the secondary market of the US stock market, and there is currently no clear exit mechanism: Grayscale Bitcoin Trust GBTC does not support share redemption, which means that once the Bitcoin Trust is subscribed, it will be forever It cannot be exchanged for Bitcoin, and can only be profited by selling the GBTC held in the secondary market.

That is to say, its selling pressure will only appear in the secondary market (stock market), which not only makes the scale of Grayscale Trust continue to grow, but also reduces the selling pressure in the encryption market. When the demand remains unchanged, it will undoubtedly help the currency price stabilization boost.

So Grayscale is indeed equivalent to an irredeemable "Bitcoin ETF". Because of this, the arbitrage channel between GBTC and Bitcoin is one-way. Since its launch, GBTC has also had a long-term (positive) premium to Bitcoin.

However, since the Purpose Bitcoin ETF was listed on February 18, the positive premium of GBTC has continued to decline, and entered the negative premium range on the 22nd, while the latest data for GBTC on April 16 is a negative premium of -12.02%.

To some extent, the disappearance of GBTC's premium indicates that GBTC investors are seeking to exit the market while ETF channels are abundant, which is also the most direct impact of the launch of ETF.

However, since the negative premium, the negative premium of encrypted trust products such as GBTC may not have directly affected the spot price of the encrypted secondary market. There is no direct positive correlation between:

Although GBTC and ETHE (Ethereum Trust) have negative premiums, LTCN (Litecoin Trust) and BCHG (BCH Trust) have always maintained high premiums - BCHG is 270%, LTCN is even as high as 935%! Even so, the high premium on the stock market has limited impact on the encrypted secondary market, and the performance of BCH and LTC is not too impressive at present.

According to a certain big V’s point of view, GBTC with a negative premium is a very good deal for hedge funds. One is to buy and hedge futures to earn futures premium; the other is to redeem BTC after betting that GBTC is successfully converted into an ETF. Even though it may take a few years, it's worth taking a small gamble on tens of billions of dollars.

Recently, Millennium Management, a multi-strategy hedge fund with an asset size of US$48.3 billion, officially announced that it had purchased Grayscale’s GBTC shares in late March, but did not disclose the specific amount.

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03. Regulators may be the biggest industry "gray rhinos" this year

In addition to institutional factors, the impact of regulation is gradually becoming apparent. Since the end of last year and the beginning of this year, there has been significantly more news about regulators.

First, on December 22, the SEC sued Ripple and its executives for violating securities laws and illegally issuing securities: Since 2013, more than 14.6 billion Ripple coins, worth $1.38 billion, have been sold in unregistered offerings.

Later, the SEC issued an asset freezing order to the encryption hedge fund Virgil Capital, accusing the fund founder Qin of misleading investors and investing their money in an encryption algorithm that profited from the price difference between platforms. Fragmented processing of cross-chain transaction orders on the RenVM "dark node" network.

In particular, Gary Gensler, who officially passed the Senate vote on April 15 and became the new US SEC chairman, has always maintained a high degree of concern in the field of cryptocurrency, and even offered courses related to blockchain and cryptocurrency during his teaching period.

In addition, Gary Gensler is known for his tough tactics in his past resume. He once stated at a meeting that Bitcoin, Ethereum, and XRP are all securities, and XRP is an illegal security. This is undoubtedly the attitude of regulators, especially the direction of regulation in the encrypted world are key influencing factors.

Federal Reserve Chairman Powell is relatively relaxed, believing that private cryptocurrencies represented by Bitcoin are more suitable for speculation. Compared with the U.S. dollar, it is more like a substitute for gold.

At the same time, Yellen, the former chairman of the Federal Reserve and the current U.S. Treasury Secretary, also publicly stated that using Bitcoin to conduct transactions is an "extremely inefficient way", and the energy consumed to process these platforms is staggering.

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Image source: Wall Street News

Whether it is the SEC, FinCEN, CFTC and other regulatory agencies, they may accelerate their own regulatory actions in 2021. Just like the institution's clear-cut entry in 2020, in 2021, the regulatory agency will be a "grey rhinoceros" with clear signs.

For the "Bitcoin ETF", which began to sound the horn of attack in 2013, after eight years of continuous "application-failure-re-application" cycle, 2021 finally sees the light, and Grayscale may also be about to Complete the historical mission of "one family dominates".

Represented by the listing of Coinbase and the approval of Bitcoin ETF, the speed at which the encrypted world will enter the traditional world in 2021 will most likely exceed imagination. Although regulatory factors are still full of great uncertainty, the prospect is still promising.