GBTC Leverage Death Rattle? With Steven McClurg

 
 

Where to find the show

Download Episode MP3 File
The file will open in a new window. Click down arrow to download the file.

“Bitcoin goes in four-year cycles based on halving, and I’m sure two years from now when everything is fine again, and prices go up again, people are going to get excited, they’re going to get greedy, and they’re going to pump things up on leverage. And I hope people remember this point in time and say, okay, stop, cut it out…leverage isn’t bad, over leverage is bad.”
— Steven McClurg

SHOW DESCRIPTION

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.

- - - -

“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.

TIMESTAMPS

00:01:20: Introductions
00:02:27: Celsius, greed, Ponzis, and FTX
00:14:11: Genesis
00:19:34: Valkyrie offer for GBTC
00:27:57: Leverage vs over-leverage
00:33:14: 2023: junk bonds, inflation, wage growth
00:41:15: Omnibus bill, and pork barrel spending
00:43:11: US politics, Speaker of the House
00:49:50: Government spending vs Fed policy
00:54:00: Cutting government deficits
00:57:51: The problem with term limits
01:00:00: Outlook for Bitcoin, housing, and interest rates
01:04:06: Final comments

 

SUPPORT THE SHOW

If you enjoy The What Bitcoin Did Podcast you can help support the show by doing the following:

If you are interested in sponsoring the show, you can read more about that here or please feel free to drop me an email to discuss options.

SPONSORS

 
 
 
 
 
 
 
 
 

SHOW NOTES

Connect with Steve McClurg:

Mentioned in the interview:

Other Relevant WBD Podcasts:

PodcastPeter McCormack