Today, Federal Reserve Chairman, Jerome Powell spoke to Congress. In his remarks, Powell made it clear that the Fed is likely to hike rates again this year and that he is committed to reducing inflation to the 2% target. He also reiterated that despite the recent declines in the rate of inflation, it’s not even close to 2% right now. This was a hawkish message consistent with the “higher for longer” mantra that he’s been repeating for the last year. DKI has been saying for 12 months that the “pivot people” who have been calling for the Fed to pivot to lower rates will one day be right, but it’s not coming soon. The market may not believe him, but we do.
Second, $GBTC is up a lot over the past two days and the discount to NAV has closed a considerable amount. $GBTC is a trust that owns Bitcoin and makes it possible to have exposure to Bitcoin for people who don’t want to self-custody or have to own everything in a brokerage account for regulatory or contractual reasons. It used to trade at a premium to the value of Bitcoin and for the last year or so, has traded at a substantial discount.
Grayscale has applied to the SEC to convert to an ETF which would allow the destruction of shares and for the company to buy back shares when they trade at a discount. This would eliminate the discount, but the SEC hasn’t approved the application. This week, BlackRock filed for an ETF which would match the spot price of Bitcoin.
BlackRock has a long record of getting these applications approved. The probability that the SEC would approve the BlackRock ETF but reject the Grayscale application again is low. In addition, BlackRock buying Bitcoin for an ETF would be a big move towards institutional acceptance of the apex cryptocurrency. DKI intends to hold GBTC until the discount to NAV closes. At that point, we would recommend converting out of the trust/ETF and buying Bitcoin, but only if you intend to self-custody.
We understand that moving Bitcoin to self-storage can be complicated and scary for a lot of people. Don’t worry. You can find our simple step-by-step guide on one way to do it safely here.
I’m at a Real Estate conference in Newport right now. Will let you know if I learn anything interesting, different, and worth sharing over the next few days.
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