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Grayscale Bitcoin Trust (GBTC) Serious Vulnerability Disclosed by Analyst

News
Fri, 06/12/2020 - 11:51
Vladislav Sopov
Grayscale Investments is pioneering providing exposure to digital assets without purchasing crypto tokens. But its manner of operation raises concerns
Grayscale Bitcoin Trust (GBTC) Serious Vulnerability Disclosed by Analyst
Cover image via stock.adobe.com
Contents

Trader, analyst and investor Qiao Wang has revealed a weak point in the manner of operations demonstrated by Grayscale Investments with their popular Bitcoin (BTC) trust. He highlighted that it lacks the significant element of a security mechanism.

Where is the redemption?

Mr. Wang announced that Grayscale Bitcoin Trust (GBTC) investments lack the mechanism of redemption, i.e. the repayment by the issuer to the holder of securities before their maturity date. Typically, investors can redeem (return to cash) his/her investments partially or in full.

Qiao Wang claims GBTC has no redemption mechanism
Image via Twitter

But that doesn't work with Grayscale Bitcoin Trust (GBTC), Mr. Wang concludes. As a result, the instrument of pegging the NAV (net assets value) to the quantity of GBTC stocks available for over-the-counter sale is broken.

So, Grayscale Investments can trade its products at a persistent discount to the NAV. Prominent traditional asset ETFs that the GBTC is commonly compared to, don't behave in this way.

Qiao Wang outlined that until this mechanism is built, GBTC investors are no more than sponsors of the Grayscale team, since:

Without the the ability to redeem, you are just donating your money

Controversial instrument

Grayscale has been among the most important newsmakers in the crypto segment in Q1-Q2, 2020. It was reported that in the fourth Bitcoin (BTC) epoch, since May 10, 2020, Grayscale has purchased more Bitcoins (BTC) than all miners around the globe have managed to collect.

Despite offering stocks of trusts based on Bitcoin Cash (BCH), XRP, ZCash (ZEC), Horizen (ZEN), Litecoin (LTC) and Ethereum Classic (ETC), Grayscale Ethereum Trust (OTCQX: ETHE) is its most popular product.

Its stocks are pumping strongly. As every stock is only 0.09 ETH , investors are buying them with a 730% premium.

This euphoria has been criticized by the blockchain analytical community. It was highlighted that attempts to leverage Ethereum (ETH) price movement via such an exotic vehicle has no benefits in terms of liquidity influx or taxation regime.

About the author

Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockchain.

Worked in independent analysis (Crypto Briefing) as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)

Ethereum (ETH) Market Cap May Become Equal to Bitcoin's (BTC): ConsenSys Director

News
Mon, 07/13/2020 - 14:38
Vladislav Sopov
John Lilic, managing director at ConsenSys decentralized development studio, has shared an over-bullish prediction for Ethereum (ETH) progress
Ethereum (ETH) Market Cap May Become Equal to Bitcoin's (BTC): ConsenSys Director
Cover image via stock.adobe.com
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John Lilic leads international business development in the ConsenSys leading blockchain development studio. He is also an expert in energy markets and cryptocurrency segments. He tracked the progress of Bitcoin's (BTC) and Ethereum's (ETH) market capitalization statistics, coming up with an extravagant prediction.

Bitcoin (BTC) should get ready for parity

Mr. Lilic outlined that Ethereum (ETH) is showcasing much healthier dynamics than its competitor is. For instance, the flagship cryptocurrency still surpasses Ethereum (ETH) by 6.3x in terms of market capitalization, while simultaneously collecting 20% fewer fees than Ethereum (ETH).

John Lilic of ConSensys foresees parity of Bitcoin (BTC) and Ethereum (ETH) market capitalizations
Image via Twitter

Also, Ethereum (ETH) is demonstrating much more impressive price dynamics this year. It gained almost 37% against Bitcoin (BTC) in 2020. That said, Ethereum (ETH) looks severely undervalued to the top manager of ConsenSys.

However, Ether is on the path to eliminating this discrepancy. Eventually, the top two cryptocurrencies may reach market capitalization parity, concludes Mr. Lilic.

Related Bitcoin (BTC) and Ethereum Have (ETH) Recovered From Black Thursday, Who Else? Coinmetrics Explains
Related
Bitcoin (BTC) and Ethereum Have (ETH) Recovered From Black Thursday, Who Else? Coinmetrics Explains

As covered by U.Today Crypto News recently, Coinmetrics on-chain research team called Bitcoin (BTC) and Ethereum (ETH) the unique crypto behemoths that have managed to recover from Black Thursday.

Bitcoin (BTC) is losing supremacy in "fee race"

Should Ethereum (ETH) overcome its undervaluation, its price may be over $1,550 based on liquid supply and current Bitcoin (BTC) market capitalization.

Recently, it was unveiled that Ethereum (ETH) blockchain continues to surpass Bitcoin (BTC) in terms of network fees for more than 30 days in a row. Ethereum (ETH) is seeing this advantage for the first time in its history.

As U.Today Crypto News reported previously, ex-Messari analyst and angel investor Qiao Wang identifies two main catalysts of Ethereum's (ETH) price run in the mid-term perspective.

Related Ethereum (ETH) Price Two Bullish Signals, According to Investor Qiao Wang
Related
Ethereum (ETH) Price Two Bullish Signals, According to Investor Qiao Wang

According to Wang, the upcoming rally may be fueled by a long-awaited transition to Proof of Stake and fixing the monetary policy of Ether token.

About the author

Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockchain.

Worked in independent analysis (Crypto Briefing) as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)