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This is the 1326th original issue of the Vernacular Blockchain
Author | Produced by Yikeyangshu｜Baihua Blockchain (ID: hellobtc) On the evening of April 14, the highly anticipated Coinbase was officially launched on the Nasdaq. It soared 70% at the opening and its market value once approached the 100 billion US dollar mark. As the most anticipated event in the industry since 2021, Coinbase's listing is undoubtedly one of the biggest events in the crypto world in 2021. At the same time, since February, Canadian regulators have approved the issuance of two Bitcoin ETFs in succession, which has also opened a new chapter in the crypto world. Bitcoin ETF
Will there be a IPO boom in 2021? Since the Winklevoss brothers first launched the Bitcoin ETF in 2013, different institutions have submitted applications for Bitcoin ETFs every year for the past nine years, but without exception, they have all ended in failure (either rejected by the US SEC or voluntarily withdrawn), and have even become a "curse that will always be passed next year."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, and listed it on the Toronto Stock Exchange. The trading volume on the first day of issuance reached nearly US$400 million, which shows the market's expectations for Bitcoin ETF. According to Glassnode data, as of April 10, 2021, the number of bitcoins held by Canada's Purpose Bitcoin ETF has reached 17,013, an astonishing growth rate. And the day after the launch of Purpose Bitcoin ETF, Canadian asset management company Evolve Funds Group launched its second Bitcoin ETF. However, what has attracted the most attention from the market is undoubtedly the SEC's application for the US Bitcoin ETF. After Canada approved a series of Bitcoin ETFs, the number of applications for US ETFs has also begun to show a significant upward trend recently. Currently, 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 awaiting approval. Grayscale previously confirmed in a document submitted to the SEC that it also intends to convert its Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). The timing of the conversion depends on the regulatory environment, and "it is only a matter of time before GBTC is converted into an ETF." Of course, since the Winklevoss brothers first submitted a Bitcoin ETF application to the U.S. Securities and Exchange Commission (SEC) in 2013, the SEC has not approved any company's application, so who will be the first to win the title of "the first Bitcoin ETF in the United States" is still uncertain. Incomplete statistics of Bitcoin ETF applications (US) Negative premium GBTC (quasi-Bitcoin ETF)
Where to go from here However, to a certain extent, as a compliant trust institution that helps investors manage crypto assets, the Grayscale Bitcoin Trust (GBTC) in 2020 actually played the role of a "quasi-Bitcoin ETF." Because before 2020, the market generally expected that once the Bitcoin ETF was passed, it would completely open up the way for traditional mainstream investors to invest in cryptocurrencies, and might promote Bitcoin and other assets to be accepted on a large scale by Wall Street, making crypto asset allocation more widely recognized. However, the repeated rejections during this period made the market expectations numb in the face of disappointment, and Grayscale emerged as a dark horse in 2020, essentially taking over the baton of "Bitcoin ETF": Grayscale's asset management scale has expanded almost astonishingly from US$2.1 billion at the beginning of 2020 to over US$20 billion by the end of 2020, a 10-fold increase in one year, making it a prominent brand giant in the crypto world, almost equivalent to a "quasi-Bitcoin ETF." As of April 16, the total assets under management of Grayscale's crypto trust have reached US$50.2 billion, about 40 times the size of the Purpose Bitcoin ETF. Grayscale's GBTC and other crypto trusts can also be traded directly in the U.S. stock secondary market, and there is currently no clear exit mechanism: Grayscale Bitcoin Trust GBTC does not support share redemption, which means that once you subscribe to the Bitcoin Trust, you will never be able to exchange it back for Bitcoin, and you can only make a profit by selling the GBTC you hold in the secondary market. That is to say, the 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 crypto market. While demand remains unchanged, it will undoubtedly help to stabilize the price of the currency. Therefore, Grayscale is indeed equivalent to a non-redeemable "Bitcoin ETF". For this reason, the arbitrage channel between GBTC and Bitcoin is one-way, and GBTC has long had a (positive) premium relative to Bitcoin since its launch. However, since the Purpose Bitcoin ETF was listed on February 18, GBTC's positive premium began to decline continuously, and entered the negative premium range on the 22nd. The latest data on April 16 showed that GBTC had a negative premium of -12.02%. To some extent, the disappearance of GBTC's premium indicates that GBTC investors are seeking to exit as ETF channels become abundant, which is also the most direct impact of the launch of ETFs. However, since the negative premium, the negative premium of crypto trust products such as GBTC may not have directly affected the spot price of the crypto secondary market. During this period, the price of Bitcoin continued to soar and once exceeded $60,000. From another perspective, it may also prove that there is no direct positive correlation between the two: Although GBTC and ETHE (Ethereum Trust) have negative premiums, LTCN (Litecoin Trust) and BCHG (BCH Trust) have maintained high premiums - BCHG is 270%, and LTCN is even as high as 935%! Even so, the high premium in the stock market has limited impact on the secondary crypto market, and the performance of BCH and LTC is not too impressive at present. According to a certain big V, the current negative premium of GBTC is a very cost-effective deal for hedge funds. First, they can buy and hedge futures to earn the premium of futures; second, they can bet that GBTC can be successfully converted into an ETF and then redeem BTC. Even if this may take a few years, for funds of tens of billions, it is worth taking out a little bit to gamble. Recently, Millennium Management, a multi-strategy hedge fund with assets 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. At present, Grayscale is bound to be impacted by the Bitcoin ETF in the short term, but in the long run it will be beneficial for the market and investors to have more channels to understand and enter the crypto market, so there is no need to worry too much about this type of data, just pay more attention to market sentiment or look at the audience level in the long run. Regulators may be the biggest industry “gray rhino” this year In addition to institutional factors, the impact of regulation is also gradually becoming more apparent. Since the end of last year and the beginning of this year, there has been a noticeable increase in news about regulatory agencies. 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 US$1.38 billion have been sold in unregistered offerings. The SEC then issued an asset freeze order to the crypto hedge fund Virgil Capital, accusing the fund's founder Qin of misleading investors into investing their money in a cryptographic algorithm that profits from price differences between platforms. The algorithm is used to fragment the RenVM "dark node" network to process cross-chain transaction orders. In particular, Gary Gensler, who was officially voted by the Senate on April 15 to become the new chairman of the US SEC, has always paid close attention to the field of cryptocurrency and even opened courses related to blockchain and cryptocurrency while teaching. Gary Gensler is known for his tough approach in the past. He once stated at a meeting that Bitcoin, Ethereum, and XRP are all securities, and XRP is an illegal security. This is undoubtedly a key factor affecting the attitude of regulators, especially the regulatory direction of the crypto world. Federal Reserve Chairman Powell was relatively mild-mannered, believing that private cryptocurrencies represented by Bitcoin are more suitable for speculation and are more like a substitute for gold than the US dollar. At the same time, former Federal Reserve Chairman and current U.S. Treasury Secretary Janet Yellen has publicly stated that using Bitcoin to conduct transactions is an "extremely inefficient way" and that the energy consumed by processing these platforms is astonishing. Therefore, she also agrees that Bitcoin is still a "highly speculative asset". Although it may bring faster and cheaper payment experience, "there are many issues that need to be studied in depth, mainly including anti-money laundering and consumer protection." Image source: Wall Street Journal Whether it is the SEC or regulatory agencies such as FinCEN and CFTC, they may accelerate their own regulatory actions in 2021. Just like the open entry of institutions in 2020, in 2021, regulatory agencies are the obvious "gray rhinos". For the "Bitcoin ETF" that started to sound the clarion call in 2013, after eight years of continuous "application-failure-reapplication" cycle among people in the industry, it finally saw the light in 2021, and Grayscale may be about to complete its historical mission of "dominantly dominating the market". With the listing of Coinbase and the approval of the Bitcoin ETF as examples, the speed at which the crypto world will advance into the traditional world in 2021 will most likely exceed imagination. Although regulatory factors are still full of great uncertainty, the prospects are still promising. | 
