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Current Grayscale Premiums according to @GrayscaleTrust
$GBTC Premium: 18.3%
$ETHE Premium: 151.8%
$GDLC Premium: 56.1%
$ETCG Premium: 34.2%
$LTCN Premium: 2878.2%
$BCHG Premium: 1149.5%
So what's actually going on here?
$GBTC Premium: 18.3%
$ETHE Premium: 151.8%
$GDLC Premium: 56.1%
$ETCG Premium: 34.2%
$LTCN Premium: 2878.2%
$BCHG Premium: 1149.5%
So what's actually going on here?
Grayscale Trusts are still widely misunderstood and attacked by Crypto Twitter constantly because of high premiums.
IMO* Grayscale is a necessary evil, but if you understand the rules of “the game,” you can take advantage of it. https://messari.io/article/playing-the-grayscale-game?utm_source=youngcryptopm&utm_medium=thread1&utm_campaign=grayscalegame
IMO* Grayscale is a necessary evil, but if you understand the rules of “the game,” you can take advantage of it. https://messari.io/article/playing-the-grayscale-game?utm_source=youngcryptopm&utm_medium=thread1&utm_campaign=grayscalegame
@RyanWatkins_ has already written a phenomenal piece about the structure before but now it’s time to play offense. https://twitter.com/ryanwatkins_/status/1271097895308218369
So if premiums are so large, why should investors look to invest in Grayscale products?
-traditional brokerages buying option
-taxes
-estate planning
-custody
-possibly higher volatility for traders intraday compared to the underlying asset
-Arbitrage for accredited investor
-traditional brokerages buying option
-taxes
-estate planning
-custody
-possibly higher volatility for traders intraday compared to the underlying asset
-Arbitrage for accredited investor
Arbitrage is the biggest reason large investors are pouring into Grayscale. An investor will borrow crypto from lending desks and use proceeds to create new shares of Grayscale trusts.
After the lock-up period ends (6 - 12 months) investors can dump their shares on the market.
After the lock-up period ends (6 - 12 months) investors can dump their shares on the market.
But if you can’t buy a private placement sale to arb, that doesn’t mean you can’t make money.
This is where understanding premiums, demand, and floats come into play.
This is where understanding premiums, demand, and floats come into play.
Premium:
A premium is a difference between the price paid for a security traded and the underlying NAV. When the market price is higher than the NAV, the difference is called a premium. A premium develops when the demand for shares is higher than price of the underlying asset.
A premium is a difference between the price paid for a security traded and the underlying NAV. When the market price is higher than the NAV, the difference is called a premium. A premium develops when the demand for shares is higher than price of the underlying asset.
This is an important note because:
Traders look at high premium changes over non-trading hours to see if there is potentially a premium “catch up” intraday.
Traders also look at average monthly and yearly premiums to see if trusts are over or undervalued in the medium term.
Traders look at high premium changes over non-trading hours to see if there is potentially a premium “catch up” intraday.
Traders also look at average monthly and yearly premiums to see if trusts are over or undervalued in the medium term.
Search metrics:
This is a little bit of a cheat code. Search metrics are important because they show retail interest in a particular asset or event. In my opinion, this is important, especially for Grayscale products, because of the limited trading hours.
This is a little bit of a cheat code. Search metrics are important because they show retail interest in a particular asset or event. In my opinion, this is important, especially for Grayscale products, because of the limited trading hours.
Float:
The float is the number of shares available to trade. In the case of LTCN, a low float could be the case for the insanely high premium (Although volume is atrociously low). LTCN currently has 9.8 million float while LTC has 68 million coins available.
The float is the number of shares available to trade. In the case of LTCN, a low float could be the case for the insanely high premium (Although volume is atrociously low). LTCN currently has 9.8 million float while LTC has 68 million coins available.
Less shares + high demand = higher volatility. https://twitter.com/youngcryptopm/status/1328849257084968961
To see the rest of the report, check out @MessariCrypto https://messari.io/article/playing-the-grayscale-game?utm_source=youngcryptopm&utm_medium=thread1&utm_campaign=grayscalegame
$GBTC on the move
