Oddbean new post about login | logout Do you think the NPCs will ever figure out that Coinbase is re-hypothecating/fractionally reserving the bitcoin they are holding in custody for the ETFs? This makes the ETFs have a lower value than actually holding bitcoin.
I don’t know that to be true and have seen no evidence to suggest that is the case.
It was an article that was briefly on coindesk that has since been disappeared from the internet. While not true fractional reserving. Coinbase is allowed by the SEC to “float paper” for short periods when ETFs do their weekly rebalancing. This is why the end of the week, Thursday/Friday has generally shown dips since ETF approval. Thus creating a situation for profit-taking by the big players who arbitrage the price difference. Good old market manipulation.