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 of Black Friday week. which means that 60 off coupon code which is our largest ever and the largest sale of the Year expires this. Friday Make sure you join because when you do, you get lifetime access to all of the new content coming out with the courses that you end up getting. because I constantly update and provide new lectures in my courses on building your wealth. Make sure to check out the new Elite Hustlers course if you're looking to start a side hustle or grow your income. And if you're looking to grow your Investments especially in real estate or stocks or otherwise, check out the other programs linked down below. 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 helpful, consider sharing the video if you like my perspectives, check out the programs on building your wealth. link down below. Make sure to take advantage of the coupon code and folks we'll see in the next one. Thank you for watching Goodbye.