Thread by @patio11

This is one of those facts that make one go “Huh”, and suggests there might be fewer physical dollars in the hands of people who have long-term positive views on Bitcoin than there are widely believed to be, or that those dollars are somehow not available.

https://twitter.com/crypto/status/1483812606259441670

“Is he subtweeting tether?” I mean dollars are dollars and they’re all fungible. I’m referring to longs in their entirety.

Markets can have weird discounts for a long time for structural reasons! But they generally close.

A favorite anecdote of mine: way back in the day, McDonalds spin out Chipotle and retained (then sold) a B share class which was equivalent to As but had more voting rights.

Those should trade at rough parity to As on open market, but they actually traded at a 10% discount for more than a year.

This was flummoxing to many people, including myself, who broadly believe in efficient markets.

The reason for the disparity was essentially that Chipotle was a very retail driven stock and thought to be overvalued.

Fact #1 meant less sophisticated investors only bought the A shares because they were the one a discount brokerage would give you if you searched for Chipotle.

Fact #2 made the trade that one had to do to arbitrage this more expensive than it would have otherwise been. (You short A and long B then wait for convergence, but shorting A was crowded and borrowing A thus cost a lot of money.)

But if you *actually liked Chipotle* and were capable of reading there really was an opportunity on the table. Buy the B shares. Wait. The end.

Several years later, in response to pressure from large B holders, Chipotle turned the Bs into As, increasing their value (and decreasing their voting rights) at the stroke of a pen.

Those of us with Bs did very well from Chipotle and decently from the market irrationality.

And thus: if you really think some of the smartest people in the world with the most money think Bitcoin is going to the moon, there is implicitly ~40% more moon available if they make a trivial transaction.

“Why has that not happened?” is an important question.