How Contagious Is The “Crypto Cough?”

There’s a reason I’m calling it the “crypto cough”.

It’s the latest contagion to get out into the wild…

And if what we’re seeing so far is any indication, this thing is seriously spreadable.

With the biggest risk of spill over being to tech stocks.

Today, we’ve got another development, this time with a company that has crypto assets listed on the exchanges.

Greyscale Bitcoin Trust - Ticker GBTC - is an OTC traded instrument that gives you access to the crypto markets.

Back in 2021 the fund traded at a premium to the price of Bitcoin… now it’s trading at a 40% discount. 

The bleeding has been massive.

All the usual suspects are involved here– FTX, 3 Arrows Capital– they got tangled up in leveraged arbitrage between the GBTC and the spot crypto market.

So what’s going on? It’s the same song and dance as every other major crypto blowup this year.

They have a lending unit attached to the company, and they have halted withdrawals. 

They have also refused to disclose any kind of proof of reserves. 

They’re claiming they have “security concerns” but I think we can all read through the lines.

Where there’s smoke there’s fire.

{{link to Shady FTX Dealings Uncover Legal Loophole To Enhance Profits (editorial), and other FTX-related editorials here}}

These are going to be growing pains for crypto. 

We get one about every 3-5 years, and this one is a big one due to the leverage that was built out in the system.

I do think that these new asset classes will eventually make it through this, with operators that aren’t scammers. 

But there’s something to be said for transparency. There wasn’t any at 3AC, there’s none at greyscale, and FTX turned out to be a massive Ponzi.

It’s a good thing this lack of transparency isn’t universal…

In the stock market, corporate insiders have an unfair advantage when it comes to buying and selling stocks.

But, they’re still allowed to do it as long as they’re transparent about it.

Unlike in crypto markets, they’re forced to fill out an obscure SEC filing…

And by tracking these filings in a very specific way, we can find BIG MOVES in little-known stocks.

>>> Unloved Stocks Go For Massive Runs When This Form Is Filed