Surviving The GBTC "Widowmaker" Trade That Blew Up In 2021 | David Choi

Feb 14, 2024

David Choi, Founder of MetStreet Labs, discusses the GBTC 'Widowmaker' trade that blew up in 2021. Topics include mechanics of the GBTC arbitrage trade, the role of Bitcoin lenders, market conditions in 2024, and the consequences of the Widowmaker trade.

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Introduction

00:00 • 3min

The Rise of Exchanges and Lack of On-Chain Activity in the Crypto Industry

02:48 • 16min

The Importance of Compliance in L1 Blockchains and the Decline of Yield Opportunities in the Lending Market

19:17 • 4min

Bitcoin's Virtuous Flywheel Effect and Trade Warning Signs

23:12 • 6min

Crypto Conference Ad and Unwinding a Trade

29:28 • 3min

The Widowmaker: A Risky Trade and its Consequences

32:17 • 17min

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This week, David Choi Founder of MetStreet Labs joins the show to discuss a viral thread he wrote on the GBTC "widowmaker" trade that blew up in 2021. We deep dive into the mechanics of the GBTC arbitrage trade, the role of Bitcoin lenders (BlockFi, Genesis) & how the unwind of the GBTC widowmaker trade dragged down the industry in 2021 - 2022.

We then compare to todays market conditions and why 2024 & beyond may be a more sustainable market environment for crypto. To hear all this & more, you'll have to tune in!

Read David's thread here: https://twitter.com/0xZergs/status/1746126672451993999?s=20

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(00:00) Introduction

(02:47) The GBTC Arbitrage Trade

(08:44) Structure Of The Trade

(15:24) BlockFi, Genesis & GBTC

(19:18) MANTRA Ad

(20:39) The Bitcoin Lending Market

(23:11) When The GBTC Trade Started To Spiral

(29:29) DAS London Plug

(30:45) Unwinding The Trade

(38:53) Current State Of The Market

(46:10) Final Thoughts

Disclaimer: Nothing discussed on On The Margin should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.