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Are Some Whales Abandoning Self Custody?
1702 sats \ 46 comments \ @siggy47 9 Jul bitcoin
Amid all this obsessive discussion of why bitcoin's price isn't moving despite all this supposed buying, I have heard some people claim that many OG whales are trading their old, self custodied bitcoin for the convenience of ETFs.
The theory goes that these exchanges are not transactions - keys are traded for shares of ETFs.
2 questions:
Can this be proven? (I know plan B claims to have done this)
Why would you consider doing this? You could just sell some bitcoin if you wish to enjoy your wealth.
I know Tom Lee is floating this theory. I'm not sure I buy it. Why go from off the radar to opening yourself up to government scrutiny, alerting the tax man, and trusting entities like Black Rock? It doesn't seem logical.
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248 sats \ 7 replies \ @elvismercury 9 Jul
I've been wondering about this too. I met a guy who had been into btc pretty early (2015 ish) and had a real job and had bought a lot of it (dunno how much exactly counted as a lot). Contra the usual narrative, he was no steely-eyed god-king with deep principles, he was basically a dipshit who was in the right place/time to strike it big, but less than average success in all other ways.
Anyway, I think: what if that guy had held until now, and found himself with a hundred million dollars on his laptop? What would he do? My first instinct is to think he'd be scared shitless and would move it to Unchained or something. My second thought is that he doesn't have the sense to be scared shitless so maybe he just lets it ride?
But there must be many such examples of way bigger whales than this guy. Remember that Asian hacker guy who had billions worth hid in a big gulp cup or whatever it was?
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65 sats \ 4 replies \ @stack_harder 9 Jul
wonder what made them suspect the big gulp cup lol
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10 sats \ 2 replies \ @The_Daniel 9 Jul
IIRC, it was a popcorn canister.
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0 sats \ 1 reply \ @realBitcoinDog 9 Jul
đź’Ż
Ultimately IRS just raided his residence and found the drive
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10 sats \ 0 replies \ @stack_harder 10 Jul
the ultimate game of hide and seek
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0 sats \ 0 replies \ @elvismercury 9 Jul
Now there's the dog that didn't bark in the night.
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16 sats \ 0 replies \ @siggy47 OP 9 Jul
Good point. Maybe I've fallen into the trap of assuming all whales must be intelligent. Dumb luck often beats smarts.
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0 sats \ 0 replies \ @Bell_curve 9 Jul
was he using coinbase?
Coinbase suspended me in late 2015
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168 sats \ 1 reply \ @freetx 9 Jul
I would say the reasons why an OG would consider such things are:
  • Inheritance. I know there are native bitcoin solutions, but its just so much easier and straight-forward when dealing with normal stocks. There are basically 100 years of laws and infrastructure to support this.
  • BBD strategy. The mega-rich all use "Buy Borrow Die" strategy. That is you buy some asset when its very undervalued (ie. Amazon, MSFT, whatever)....and as it rises in price you borrow against it and live off the cash, never selling the original asset. Again, yes there are "bitcoin native" solutions but frankly they all kinda suck. The margin lending rates for stocks in much much lower than anything offered in bitcoin-land. I think even Robinhood offers something like 6% margin rates....which obviously means as long as 6% is less than the rate of appreciation of your asset, you can basically do this forever....
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0 sats \ 0 replies \ @Bell_curve 9 Jul
are you sure it's not 5 percent?
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222 sats \ 13 replies \ @justin_shocknet 9 Jul
You can get a 5% APR margin loan, with only a 25% LTV, in pretty much any size with ETFs
That tool for speculative attack is a huge magnet for coins, there's nothing else even close
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30 sats \ 6 replies \ @sirstackalot 9 Jul
Can you please ELI5?
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0 sats \ 5 replies \ @SimpleStacker 9 Jul
AFAICT, a 5% APR (annual percentage rate) loan at 25% LTV (loan-to-value ratio) means:
  • If you put up $100k of your bitcoin ETFs up as collateral, you can borrow up to $25k with an annual interest rate of 5%.
(Putting your ETFs up as collateral means that if you fail to repay your loan, they confiscate your ETF shares)
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0 sats \ 4 replies \ @justin_shocknet 9 Jul
You can borrow 75k
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0 sats \ 3 replies \ @SimpleStacker 9 Jul
That would make it 75% LTV, no?
5% APR 75% LTV is actually really good, almost like a mortgage.
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0 sats \ 2 replies \ @justin_shocknet 10 Jul
I meant maintenance ratio not LTV apparently
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11 sats \ 3 replies \ @siggy47 OP 9 Jul
Wow. Who is offering this?
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47 sats \ 2 replies \ @justin_shocknet 9 Jul
Robinhood for one, who I've honestly been pretty impressed with after moving a few things there there...
When researching rates Interactive Brokers was pretty close IIRC too.
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17 sats \ 1 reply \ @Bell_curve 9 Jul
I need to login to Robinhood again
is it 5 or 6 percent?
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11 sats \ 0 replies \ @justin_shocknet 9 Jul
LTV for IBIT is 25%, the others seem to be 30%
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0 sats \ 1 reply \ @fiatbad 9 Jul
Yup. I haven't done this yet, but it is a tempting carrot. It does sound enticing to move some out of cold storage for this exact reason.
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0 sats \ 0 replies \ @justin_shocknet 9 Jul
If you have room at the end of the year on your tax deductions moving some each year tax free is a good strategy
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149 sats \ 0 replies \ @grayruby 9 Jul
They can borrow against etf holdings at better rates than they can borrow against bitcoin collateral so I am sure some of this is occurring. Maybe not entire stacks. I also think 100k was an area a lot of early adopters planned to sell some. And I think the last bear market was much deeper than we all expected so a lot of bitcoiners delayed purchases to stack more sats. Now that the price is elevated there is a good chance they are selling a bit to finance the stuff they held off on buying during the bear.
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73 sats \ 2 replies \ @0xbitcoiner 9 Jul
Maybe for tax reasons, or because it's easier not having to hold the private keys.
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36 sats \ 1 reply \ @siggy47 OP 9 Jul
You're probably right, but these guys have been keeping their coins secure for a decade or more. They must be pretty savvy. I don't see tax benefits. They can take a loan against some of their coins, which would be a tax free event in almost all jurisdictions.
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36 sats \ 0 replies \ @Bell_curve 9 Jul
when you have a 'ton' of anything including bitcoin, some or all of it has to be in cold storage and insured
my 2 cents
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57 sats \ 0 replies \ @softglitter2d 9 Jul
I have a theory over here. Those who like ETFs have profiles: the first one is they get used to make TradFi for their whole life so, they're going to move only where they are comfortable, meaning, with fiat taxes, fiat accounting, everything as intend to be because they made it like that in the last...40 years? I don't know how long they've been there.
Second profile is that amuse me because there are milennials (and all the following) who embrace bitcoin not as a solution or something, just a commodity and don't understand a thing about what are they buying. PlanB's annoucement is not concerning because he's someone who was part of TradFi, so I think his profile is the first one but the rest of people, who are willing to sacrifice their bitcoins for a piece of paper...man, they're getting rugged.
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57 sats \ 1 reply \ @guerratotal 9 Jul
I wouldn't do it for anything. Friendship with the government is only good if it gives you some benefit... and even then, be careful. Going from having total sovereignty over your SATs to trusting BlackRock or any regulated entity is trading freedom for "convenience." No thanks.
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0 sats \ 0 replies \ @cyphersat 9 Jul freebie
It depends on what kind of benefit but in most cases it means that someone else lost their freedom
66 sats \ 1 reply \ @crenshaw 9 Jul
Not every person who owns bitcoin adheres to cypherpunk ideals. And the way things are going self-custody could become a pretty niche behavior.
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0 sats \ 0 replies \ @siggy47 OP 9 Jul
I agree with both your points. The only thing that bugs me is that self custody is getting marginalized already. Just the term bitcoin maxi or cypherpunk connotes survivalist, gun toting crazy. Saylor caused a lot of this with his off hand, sneering remark a few months ago. You don't need to be the Unabomber to want to avoid BlackRock or Microstrategy.
To trust the financial system goes against everything bitcoin stands for. And yeah, I know bitcoin don't care, and it will survive this shit too, but the attitude can still be dangerous for individuals fighting the battles. (samourai)
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47 sats \ 0 replies \ @bitcoingecko 9 Jul
I can understand moving a percentage to a government friendly account like the ETF. Everyone has a different situation and perspective.
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48 sats \ 1 reply \ @south_korea_ln 10 Jul
Many OGs have shown themselves to be as much driven by fiat profits as many late-coming NGU people. The cypherpunk community is fringe and likely always will be. Even someone like Adam Back, with amazing contributions to the movement pre-Satoshi, has shown his true self.
Lots of smart people, lots of idiots, too. Not more, not less than anywhere else in society.
No, Bitcoiners are not smarter than the average person (#1015955).
And who knows, Satoshi himself might have offloaded his coins to BlackRock for a few paper IOUs if he were still around.
Slay your heroes~~
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0 sats \ 0 replies \ @south_korea_ln 10 Jul
(I know plan B claims to have done this)
The guy from the "let me do some polynomial (?) fitting to match historical data and adjust it as it keeps getting invalidated with new data"-S2F model?
I would not trust any of his claims~~
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36 sats \ 1 reply \ @Solomonsatoshi 9 Jul
Don't ETFs have tax advantages? Selling large sums of Bitcoin off the radar is not always easy. Stackers wanting KYC free BTC need to deal directly with OG whales to prevent this!
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21 sats \ 0 replies \ @siggy47 OP 9 Jul
I can only speak for the US, but the tax advantages I see are only in retirement accounts. I'm not sure whether like kind trades are taxable events, but one way or another you're liable for capital gains eventually. Loans are not taxable events. It's true that fiat loans have lower interest rates now, but the bitcoin loan industry is still in its infancy. Things will improve. And, keeping self custody has got to be worth a few additional percent interest.
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36 sats \ 0 replies \ @Artilektt 9 Jul
To me it's pretty simple and nearly what you said - we're around ATHs and this will pull coins to the market. There are sellers, simple as that.
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36 sats \ 0 replies \ @Coinsreporter 9 Jul
bitcoin's price isn't moving despite all this supposed buying,
One theory is that they don't buy it in a single move/day, instead they do it continuously at the lowest possible prices. So someone must have sold at those prices and because they bought at lower prices, the prices don't move up too much.
I don't think whales have been going custodial for their coins in a large number, may be a few who still believe in the system and think that it'd be a theft of tax or are afraid they could be caught under the law for selling at non-kyc, or are in need of huge fiat amounts.
TBH, I don't think you can rely on non-KYC exchanges when you need more fiat amounts or when an urgent need arises for a big amount.
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36 sats \ 1 reply \ @DarthCoin 9 Jul
Why would you consider doing this?
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0 sats \ 0 replies \ @Solomonsatoshi 9 Jul
Most people are sheep and prefer the safe pastures of state governance than the wilds of anarchy.
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0 sats \ 0 replies \ @kurszusz 10 Jul
No...they not! That's just for the sake of "inducing the enemy" ;)
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0 sats \ 1 reply \ @Scoresby 10 Jul
OG whales are trading their old, self custodied bitcoin for the convenience of ETFs
If someone had a pile of bitcoin and sold it in order to buy the same dollar amount of Bitcoin ETF shares, wouldn't we expect this to have no effect on the price?
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0 sats \ 0 replies \ @siggy47 OP 10 Jul
Exactly. In fact that is one of Tom Lee's explanations as to why the price is not soaring.
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36 sats \ 0 replies \ @HighOfLot 9 Jul outlawed
stackers have outlawed this. turn on wild west mode in your /settings to see outlawed content.