Increased holdings of 100,000 Bitcoins in three months, grayscale again issued anti-gold ads, and Gold supporters are in an awkward position


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Increased holdings of 100,000 Bitcoins in three months, grayscale again issued anti-gold advertisements, and Gold supporters are in an awkward position

Grayscale once again pointed the finger at gold.

On December 1, Grayscale decided to put the anti-gold advertisement “Drop Gold” on all major television networks in the United States for the second time. Once the news was launched on Twitter, it triggered intense discussions. Gold supporters strongly opposed it, and Bitcoin supporters clapped and praised it.

So, how does gray scale “anti-gold”? Behind the gray scale buying, will it really contribute to the bubble? What awkward situation does gold supporters face?

1. Grayscale issued another anti-gold advertisement, which was opposed by gold supporters

On December 1, Digital Currency Group CEO Barry Silbert tweeted that after the price of Bitcoin climbed to a record high, the grayscale anti-gold advertisement “Drop Gold” will be re-launched on all major television networks in the United States.

The ad called for people to abandon gold and buy Bitcoin.

In this regard, Michael Sonnenshein, managing director of Grayscale, claimed that this advertisement is intended to encourage investors to allocate their gold reserves into Bitcoin.

This “movement” was supported by Bitcoin supporters.

For example, Jim Tillman, a cryptocurrency supporter, commented, “Looking at the operation of the guy Michael Saylor, I exchanged 50% of my gold for Bitcoin.”

This is the second time that Grayscale has strongly opposed gold and advocated people to hold Bitcoin. The last time the “Drop Gold” campaign was launched was in August 2019. At that time, Grayscale praised Bitcoin as an emerging financial future: “Bitcoin is still in its infancy, but it is driving global growth in new ways. It also retains the characteristics of a store of value, which can provide inflation protection and make Bitcoin an investment value. Bitcoin only accounts for a small part of the market it wants to disrupt—the latter is in the trillions of dollars.”

However, this “Drop Gold” event also attracted opposition from gold supporters.

Peter Schiff, CEO of Euro Pacific Capital and an opponent of Bitcoin, said that this advertisement is as ridiculous as it was when it was first launched. Bitcoin is not digital gold, nor is it a viable substitute for gold. Soon after, the transaction price of GBTC will be greatly discounted relative to its real value, and Grayscale will have to gradually liquidate its depreciated Bitcoin to pay its 2% annual fee.

Peter Schiff’s views have also been criticized.

For example, under this tweet by Peter Schiff, Michael Kapilkov, a university teacher who teaches blockchain and cryptocurrency at Pace University in the United States, expressed a different view. Michael Kapilkov is also the author of Cointelegraph’s special issue.

Michael Kapilkov believes, “Why is there a big discount? The biggest discount (GBTC) is only 2%.”

Another investor who calls himself Crypto Martian commented, “Peter Schiff may think that cars cannot replace carriages, the Internet cannot replace fax machines, and Netflix cannot replace Blockbuster Video.”

It is impossible for gold supporters to stop there. Peter Schiff believes that Grayscale encourages people to give up gold and buy Bitcoin, which is fueling a financial bubble.

2. Gold supporter: Grayscale is contributing to the bubble! Is that right?

Are grayscale anti-gold ads really fueling the bubble?

On December 1, Peter Schiff, CEO of Euro Pacific Capital and Bitcoin opponent, tweeted that the following is how Grayscale Trust helped boost the Bitcoin bubble.

Peter Schiff believes that, first of all, Grayscale has spent a lot of money on CNBC to continuously advertise Bitcoin to investors. CNBC continues to invite guests who support Bitcoin to broadcast live, and these guests will make sky-high price predictions. At the same time, CNBC prevents Bitcoin skeptics from appearing on the show. This continuous appreciation has resulted in GBTC’s trading price at a large premium over its net asset value, so that GBTC can be quickly sold to the market for instant profits.

Then, the company used the cash obtained from selling GBTC to buy more bitcoin in the market, putting additional upward pressure on bitcoin prices.

Finally, Grayscale used part of the profits from its premium sale to fund more CNBC advertising. This process may be repeated until the bubble bursts and the demand for GBTC dries up. Once GBTC speculators want to exit, GBTC will trade at a discount, which means that Grayscale will stop buying more bitcoins in the market.

Peter Schiff also said that Bitcoin is the biggest bubble in human history.

On October 28th, Peter Schiff tweeted that Bitcoin is the largest bubble in history. He said, “If you measure the size of the asset bubble based on the buyer’s confidence in the transaction, the Bitcoin bubble is my opinion. The biggest bubble ever. Bitcoin Hodler is more confident that they are right and confident that they will not lose compared to those Internet or property buyers during the bubble.”

But the reality is that there are two ways for Grayscale to accept Bitcoin trust. The first is to directly accept BTC and then issue the corresponding GBTC. The second is to entrust a third-party institution to purchase BTC in the market. There are two ways for Grayscale There is no direct contact with cash, and there is no possibility of price manipulation that Peter Schiff thinks.

Just take the last few months as an example.

From September 1 to the present, within three months, Grayscale has increased its holdings by 100,000 BTC, and the total amount of custody account assets has soared from USD 6.3 billion on September 3 to USD 12.1 billion on December 1. An increase of 92%.

You know, from May 2020, after the third reduction in Bitcoin production, the daily supply has changed from 1,800 to 900, which means that the number of Bitcoins entering circulation every day has been reduced to 900, and an additional issuance will be made in one month. 27,000 bitcoins. So from September to the beginning of December, the total number of bitcoins produced was 81,000, and the gray family bought more than 100,000 bitcoins.

Moreover, due to the holding characteristics of gray-scale assets, its custody Bitcoin cannot enter the secondary market. In this case, the so-called bubble-promoting view is worthy of scrutiny.

What’s more, the current market value of Bitcoin is maintained at 350 billion US dollars, far less than gold 12 trillion US dollars, I am afraid it is too early to talk about bubbles.

In fact, on the road of “guarding gold”, gold supporters like Peter Schiff are also facing an awkward situation.

3. The embarrassment of gold supporters

On August 17, in response to Buffett’s investment in Barrick Gold, gold supporter Peter Schiff tweeted that Buffett’s investment in Barrick was a further condemnation of Bitcoin. Buffett obviously does not believe that Bitcoin poses a threat to gold’s dominance of safe-haven assets. Gold will continue to develop, and Bitcoin will only be a flash in the pan.

However, just 10 days later, on October 28, Peter Schiff’s son, who had just turned 18, announced that he had purchased Bitcoin.

In this regard, Peter Schiff tweeted that since so many of you guys who support Bitcoin laugh at me because my son Spencer bought Bitcoin, why not give him Bitcoin as a late birthday gift? He turned 18 yesterday and he will not lose his Bitcoin. Earlier, Peter Schiff’s son Spencer said on Twitter that he already has $450 worth of bitcoin, but he also said that bitcoin only accounts for a small part of his portfolio and he has more money in gold mining stocks. However, he is considering investing more money in Bitcoin.

Subsequently, on September 8th, Peter Schiff’s son bought more bitcoins despite his opposition. Peter Schiff posted on Twitter that his son did not listen to his advice and bought more bitcoins.

Schiff also launched a poll via Twitter, asking “Whose advice do you want to follow? A 57-year-old experienced investor/business owner who has been an investment expert for more than 30 years. Or an 18-year-old college freshman who doesn’t even have a job. “

Even more embarrassing is that during Peter Schiff’s constant attacks on Bitcoin, the price of Bitcoin rose to around $20,000 in just a few months, an increase of nearly 100%.

On the contrary, the price of gold has been quite weak. Since the impact of US$2074 per ounce on August 7, it has fallen all the way to US$1770 per ounce, a decline of 15%.

Where are we going to be stubborn in the traditional financial world? Max Keizer, a senior Wall Street investment analyst and Bitcoin supporter, may have already given the answer.

On August 17, Max Keizer asserted that Buffett and another Bitcoin critic, Peter Schiff, would eventually get on the bus and start buying BTC. They will all snap up Bitcoin for $50,000.