Bitcoin ETF

Bitcoin

Grayscale Bitcoin Trust

<div class="finbold">
 <p class="paragraph">In the short term, the spot Bitcoin exchange-traded fund (ETF) launch has failed to meet market expectations regarding the valuation of most assets. Indeed, the approval turned out to be a “buy the rumor, sell the news” event, with Bitcoin (BTC) briefly retesting the $49,000 mark before correcting amid an over $80 billion outflow in market cap.</p>
 <p class="paragraph">In an X (formerly Twitter) post on January 15, reformed hedge fund <a rel="noopener noreferrer nofollow" title="manager" href="https://thebittimes.com/tag/manager.html">manager</a> and managing partner at the Bitcoin Opportunity Fund, James Lavish, outlined five insights into why the spot Bitcoin ETF <a rel="noopener noreferrer nofollow" title="failed" href="https://thebittimes.com/tag/failed.html">failed</a> to meet <a rel="noopener noreferrer nofollow" title="expectations" href="https://thebittimes.com/tag/expectations.html">expectations</a>. A significant portion of his assessment centered around the Grayscale Bitcoin Trust (GBTC).&nbsp;</p>
 <h2 class="wp-block-heading" id="h-lack-of-god-candle-moment">Lack of ‘God Candle’ moment</h2>
 <p class="paragraph">According to Lavish, the absence of a significant surge in capital and the anticipated ‘God Candle’ moment may have contributed to the overall perception of the Bitcoin ETF launch as falling short of expectations. He pointed out that the lack of this moment failed to inspire an inflow of capital.&nbsp;</p>
 <blockquote class="wp-block-quote">
  <p class="paragraph">“There was massive hype and fanfare leading up to the Bitcoin spot-ETF launch. Yet, the launch didn’t quite live up to <a rel="noopener noreferrer nofollow" title="expectations" href="https://thebittimes.com/tag/expectations.html">expectations</a>. There wasn’t a tsunami of capital inflow, and there was no ‘God Candle,’ he noted.&nbsp;</p>
 </blockquote>
 <h2 class="wp-block-heading" id="h-long-standing-discount-on-gbtc-shares">Long-standing discount on GBTC shares</h2>
 <div class="not-prose relative overflow-auto scrollbar-hide mb-8 mt-8">
  <div class="relative w-full flex gap-6 snap-x snap-mandatory overflow-x-auto">
   <div class="max-w-[300px]">
    <div class="py-0 first:pt-0 last:pb-0">
     <div class="flex gap-x-4">
      <div class="shrink-0  w-24"><img data-src="https://cdn.thebittimes.com/images/2024/01/16/88e18dd285c813c95d802352afcb1100.webp" alt class=" w-full rounded-md lazy">
      </div>
      <div>
       Cryptocurrency 
       <h3 class="font-bold leading-6 " id="short-squeeze-alert-two-cryptocurrencies-that-could-soar">Short squeeze alert: Two cryptocurrencies that could soar</h3>
       <div class="sm:flex gap-x-3 mt-2">
       </div>
      </div>
     </div>
    </div>
   </div>
   <div class="max-w-[300px]">
    <div class="py-0 first:pt-0 last:pb-0">
     <div class="flex gap-x-4">
      <div class="shrink-0  w-24"><img data-src="https://cdn.thebittimes.com/images/2024/01/16/98e608b562cf6b001abfe998881b8b02.webp" alt class=" w-full rounded-md lazy">
      </div>
      <div>
       Cryptocurrency 
       <h3 class="font-bold leading-6 " id="binance-copy-trading-averages-over-2-billion-weekly-since-launch">Binance copy trading averages over $2 billion weekly since launch</h3>
       <div class="sm:flex gap-x-3 mt-2">
       </div>
      </div>
     </div>
    </div>
   </div>
   <div class="max-w-[300px]">
    <div class="py-0 first:pt-0 last:pb-0">
     <div class="flex gap-x-4">
      <div class="shrink-0  w-24"><img data-src="https://cdn.thebittimes.com/images/2024/01/16/539af57d0c486ba554812eba18b2dd15.webp" alt class=" w-full rounded-md lazy">
      </div>
      <div>
       Cryptocurrency 
       <h3 class="font-bold leading-6 " id="microsoft-s-copilot-ai-predicts-bitcoin-price-for-end-of-2024">Microsoft’s Copilot AI predicts Bitcoin price for end of 2024</h3>
       <div class="sm:flex gap-x-3 mt-2">
       </div>
      </div>
     </div>
    </div>
   </div>
   <div class="max-w-[300px]">
    <div class="py-0 first:pt-0 last:pb-0">
     <div class="flex gap-x-4">
      <div class="shrink-0  w-24"><img data-src="https://cdn.thebittimes.com/images/2024/01/16/1d67fceb08a74158c0e5d6c3345e52b4.webp" alt class=" w-full rounded-md lazy">
      </div>
      <div>
       Cryptocurrency 
       <h3 class="font-bold leading-6 " id="google-bard-picks-3-promising-bitcoin-stocks-for-2024">Google Bard picks 3 promising Bitcoin stocks for 2024</h3>
       <div class="sm:flex gap-x-3 mt-2">
       </div>
      </div>
     </div>
    </div>
   </div>
   <div class="max-w-[300px]">
    <div class="py-0 first:pt-0 last:pb-0">
     <div class="flex gap-x-4">
      <div class="shrink-0  w-24"><img data-src="https://cdn.thebittimes.com/images/2024/01/16/02f8ffbab5025ff1ab8a305340c052d4.webp" alt class=" w-full rounded-md lazy">
      </div>
      <div>
       Cryptocurrency 
       <h3 class="font-bold leading-6 " id="solana-mobile-plans-to-launch-second-crypto-smartphone">Solana Mobile plans to launch second crypto smartphone</h3>
       <div class="sm:flex gap-x-3 mt-2">
       </div>
      </div>
     </div>
    </div>
   </div>
  </div>
 </div>
 <div class="mb-4 bg-slate-50 rounded-md layout-adjustment">
  <div id="finbold.com_middle" style="min-width: 300px; min-height: 250px;">
  </div>
 </div>
 <p class="paragraph">Lavish highlighted that a significant portion of the original holders of the Grayscale Bitcoin Trust had been holding shares at a discount to actual Bitcoin on the New York Stock Exchange (NYSE) for years. These holders eagerly awaited the conversion of GBTC to a spot ETF, anticipating the opportunity to sell their shares at their full market value.</p>
 <h2 class="wp-block-heading" id="h-selling-pressure">Selling pressure</h2>
 <p class="paragraph">At the same time, the <a rel="noopener noreferrer nofollow" title="manager" href="https://thebittimes.com/tag/manager.html">manager</a> pointed out that most of the trading volume in GBTC around the ETF launch was due to selling rather than buying. Original holders, waiting for the conversion, likely sold their shares to realize the full value.</p>
 <figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter">
  <div class="wp-block-embed__wrapper">
   <blockquote class="twitter-tweet" data-width="500" data-dnt="true">
    <p lang="en" dir="ltr">And so, they have been waiting for GBTC conversion to a Spot ETF in order to sell their shares for full value<br><br>As a result, most of the volume in GBTC this week was *selling*, not buying<br><br>This is why we extracted it from the calculations above.</p>— James Lavish (@jameslavish) January 15, 2024
   </blockquote>
  </div>
 </figure>
 <h2 class="wp-block-heading" id="h-role-of-authorized-participants-nbsp">Role of Authorized Participants&nbsp;</h2>
 <p class="paragraph">Considering that the initial launch of the ETF was characterized by selling, Lavish shifted his attention to the role of Authorized Participants (APs) in the process. APs, acting on behalf of ETF managers like BlackRock Inc. (NYSE: BLK), buy and sell to create an attractive investment security. They then create or redeem ETF shares to align the assets under management with the market value of the ETF.</p>
 <blockquote class="wp-block-quote">
  <p class="paragraph">“And so, with GBTC sellers of shares unlocked by the ETF conversion, APs redeemed shares and sold underlying Bitcoin, reducing the GBTC ETF Net Asset Value,” he added.&nbsp;</p>
 </blockquote>
 <h2 class="wp-block-heading" id="h-shift-to-other-etfs">Shift to other ETFs</h2>
 <p class="paragraph">In his view, Lavish believes that sellers of GBTC shares, frustrated with the long-standing discount to Bitcoin, likely turned around and bought other ETFs instead. This shift may have been driven by dissatisfaction with GBTC and the desire to move funds to more favorable investment options.</p>
 <blockquote class="wp-block-quote">
  <p class="paragraph">“Many of the sellers of GBTC shares then (likely) turned around and bought one of the other ETFs instead. Maybe it was out of frustration with GBTC, having been locked up for so long with a terrible discount to Bitcoin,” he added.&nbsp;</p>
 </blockquote>
 <p class="paragraph">Finally, he observed that despite the crypto market failing to witness a direct impact of the product, some ETFs, excluding Invesco and Valkyrie, succeeded. He concluded that the success of these ETFs lies in the fact that buyers are now holding an asset that accurately reflects the amount of Bitcoin it is supposed to represent rather than trading at a significant premium or discount to the underlying BTC price.</p>
 <p class="paragraph"></p>
</div>
<p>Source: <a rel="noopener noreferrer nofollow" target="_blank" href="https://thebittimes.com/hedge-fund-manager-lists-5-reasons-why-bitcoin-etf-failed-to-meet-expectations-tbt76724.html">https://thebittimes.com/hedge-fund-manager-lists-5-reasons-why-bitcoin-etf-failed-to-meet-expectations-tbt76724.html</a></p>

Hedge fund manager lists 5 reasons why Bitcoin ETF failed to meet expectations

Table of Contents

TheBitTimes

Other articles published on Jan 16, 2024

Expert Predicts Record-Highs After Bitcoin ETF Approval; InQubeta & Solana Show Robust Price Growth

Verichains joins WEMIX3.0 Mainnet’s “40 WONDERS” Node Council Partners as WONDER 12

Plus500 Obtains License From DFSA, Fortifying Strategic Expansion in the UAE

3 Countries Agree To Launch BRICS Currency To Challenge US Dollar

3 Cryptos Set To Explode In 2024

ICP Price Prediction: Is ICP Ready to Clear Range Above $14?

Join our free newsletter for daily crypto updates!