GBTC Leverage Death Rattle? With Steven McClurg - WBD603

Steven McClurg is a Co-Founder of Valkyrie Investments. In this
interview, we discuss the causes of the crypto crash of 2022 and
the effects seeping into 2023. We talk about Genesis, GBTC and
Valkyrie's proposal; how over-leverage and debt are leading to a
breaking point; the positives of political chaos, and how Bitcoin
could have bottomed out.


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“In a risk-off environment, Bitcoin definitely goes down, there's
no doubt about it.” That was Steve McClurg being interviewed on
What Bitcoin Did in October 2021. Since then we’ve witnessed the
biggest players in the market going bankrupt one after another in
the biggest domino toppling event the ecosystem has ever seen.


It is therefore more than timely to unpick what happened with one
of those who foresaw problems and who manages one of the
investment vehicles not having to charter chapter 11 proceedings.
Steve himself admits to being surprised at the scale of the
events that have occurred in 2022. The extent of recklessness,
greed and criminality has shocked us all. But, there were warning
signs.


The amount of yield on offer was eye-watering, particularly in
the context of a fiat monetary system when lending returns were
negligible. This was the canary in the coal mine. The fact that
there was no meaningful borrowing market on the other side of
these trades seems obvious in hindsight. However, the scale of
over-leverage and rehypothecation was able to hide problems until
the moment systemic collapse had become all but inevitable.


The question is, therefore, what now? Are some of the large funds
still locked into active investment vehicles, such as GBTC, still
safe? What can we do to protect the industry from such malign
actions in the future, or, are crashes like these inevitable? And
what about Bitcoin? Has its price bottomed out? Can it yet return
as an investment vehicle for the masses? It’s time to ask someone
at the coal face.