Investment strategist Lyn Alden explores a fundamental catalyst that is likely to trigger the turnaround in Bitcoin this year.

Lyn Alden – Founder of Lyn Alden Investment Strategy

in a meeting interview with Angelo Robles, CEO of the Family Office Association, explaining how institutional investors have used the trading opportunities offered by the Grayscale Bitcoin Trust (GBTC).

“GBTC used to be one of the few public mediums of exchange Bitcoin was available to investors who wanted access to a brokerage account. Institutional investors can also use it. In addition to people who buy Bitcoin through trusts, there is also neutral arbitrage trading there. Being a fairly unique vehicle, the GBTC has traded at a premium above its NAV (Net Asset Value) for most of its history. And what people can do is with a six month ban they can say you are buying from NAV. “

“Some like to use this fund, others use it to collect premiums. And they will come to the NAV and then they will sell the same amount of bitcoin and eventually have a neutral position. “

“After the six month lock-up period, you can sell your GBTC shares, you can short your Bitcoin, and regardless of the premium to the NAV, you will retire it. You can do it again. You can do it every six months. “

Alden emphasized that while institutional investors can sell their GBTC shares, the affected bitcoins cannot be sold back to the market.

“Bitcoin cannot be refunded by the trust, so Bitcoin is now permanently in it. It converted highly liquid bitcoins from exchanges into illiquid bitcoins and stored them in cold wallets. If that repeats itself, it’s like a “Hotel California” for Bitcoin. GBTC is the biggest Bitcoin buyer in the second half of 2020. “

Alden said the emergence of competitors has undermined the demand for GBTC, reducing the percentage of bitcoins in cold wallets.

“Now GBTC has competition from Canada’s Bitcoin ETF, some exchange-traded fund products in Europe, the Skybridge Bitcoin fund, all other things are generally cheaper while Grayscale’s shares are currently down versus NAV.” And this deal is over. “

“Essentially, this biggest buyer is being kicked out of the market. When we saw this in January 2021, Bitcoin briefly began to consolidate and hit new highs, but the momentum was weaker. “

“And then we realized that Elon Musk was concerned, it was affecting a market that was already consolidating and moving sideways. So it helped spark the recession. So I think that played an important role. But what is more fundamental in my opinion is just the balance of supply and demand for Bitcoin itself. “

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