GBTC Bitcoin Investment Trust Observer

[mmortal03]

"Long shareholders now not only have to deal with Bitcoin currency risk but also Bitcoin ETF demand risk. Even if the Bitcoin currency rate continues to rally, a reduction in ETF demand will begin to collapse the 106% premium and ETF long shareholders will have been conceptually correct in their Bitcoin currency rate play but will lose on the ETF’s premium contraction. From July to November 2016 the Bitcoin currency rates appreciated by 15% and the GBTC ETF was down 18%, but from November 2016 to the present, Bitcoin currency rates appreciated by 300% and the GBTC ETF rose 387%."

https://www.s3partners.net/Research/GBTC.php

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[Bitcoinaire]

It looks like you guys think GBTC's spread vs actually holding bitcoins will begin to shrink? Its been on a tear (GBTC).

[mmortal03]

It looks like you guys think GBTC's spread vs actually holding bitcoins will begin to shrink? Its been on a tear (GBTC).

Yeah, but if the current BTC price rally continues into tomorrow, then this irrational exuberance involved in the GBTC premium might enable a $600 per share price tomorrow, which would mean that I got out too early.

[MrSunshine]

It looks like you guys think GBTC's spread vs actually holding bitcoins will begin to shrink? Its been on a tear (GBTC).

Yeah, but if the current BTC price rally continues into tomorrow, then this irrational exuberance involved in the GBTC premium might enable a $600 per share price tomorrow, which would mean that I got out too early.

Yea, I hope so; in at 33, would like to get a nice profit and get back in when things settle down.

[mmortal03]

Looks like it's going to open above 500.

https://www.youtube.com/watch?v=UPw-3e_pzqU

[Chainsaw]

(I'm bullish, and hold a position in GBTC. This is not advice, yadayada)

We spiked to over 300% on day one.
We spiked to nearly $150 on the spike to $500.

Lots of mainstream articles are coming out now. They are the first hours and days mainstream investors have considered GBTC as an investment.
There are some aspects to it that are different from a TSLA play these authors might have considered.
...and then they write from their position of ignorance.

You can't short GBTC. It's a pink sheet stock.
Most holders have to hold for a full year. The mix of people in this camp was originally very large, and is shrinking as casual investors enter the stock.

GBTC is a slow moving ship.
Historically, it has done two things that can cause investors to gnash their teeth:

It likes to price in the new high ahead of time.
It likes to shrug off minor corrections and adhere to its 1yr+ support line.

These writers are focused on spread.
Spread is a lagging variable here, and it can go much further out of bounds than is typically true, because of the aforementioned reasons.

Because of the risk/reward profile, I tend to wait until we seem to have a confirmation of top before thinking about exiting.
Most recently that was a rebalancing sell in the 400s vs the 500s.

All the articles regarding GBTC now ignore its past behavior, and smack of a first-days understanding of the investment vehicle.

[MrSunshine]

...

All the articles regarding GBTC now ignore its past behavior, and smack of a first-days understanding of the investment vehicle.

Looking at the history is a very good point.

[mmortal03]

One thing to keep in mind is that if we have a hard fork, and you hold actual bitcoins, you will be able to hold them and ultimately spend them on the most valued chain. (You'll also be able to spend them on the other chain, of course). However, if you hold GBTC where you don't control the actual private keys, it'll be interesting to see what happens to the price of your shares through that time period, and you might not have the flexibility of your value being retained on both sides of the chain. Bitcoin Investment Trust might need to choose one or the other to back the shares, right? Thoughts?

Edit: Keep in mind that Xapo would be managing the actual private keys.

[Bitcoinaire]

"It's Not An ETF" - Industry Expert Warns, Be Wary Of The Skyrocketing Bitcoin Fund

http://www.zerohedge.com/news/2017-06-06/its-not-etf-industry-expert-warns-be-wary-skyrocketing-bitcoin-fund

[mmortal03]

"It's Not An ETF" - Industry Expert Warns, Be Wary Of The Skyrocketing Bitcoin Fund

http://www.zerohedge.com/news/2017-06-06/its-not-etf-industry-expert-warns-be-wary-skyrocketing-bitcoin-fund

Here's another one: https://www.fool.com/investing/2017/06/02/the-sure-sign-of-a-bitcoin-bubble.aspx?yptr=yahoo

[mmortal03]

And, another one: https://www.bloomberg.com/news/articles/2017-05-31/bitcoin-exuberance-even-more-dramatic-in-lone-investment-trust

[mmortal03]

They're keepin' 'em coming: http://www.investopedia.com/news/why-buy-expensive-bitcoin-etf-instead-actual-bitcoin/

[mmortal03]

"I would emphasize that the Bitcoin Investment Trust (OTCQX:GBTC), which is the only direct way to "invest" in bitcoin, trades for $540. Now, according to Grayscale, this ETF holds 0.09289534 Bitcoins per share. Even at the currently euphoric prices, which can be checked in real time here, Bitcoin goes for $2,845.

As such, each GBTC share has a $264 NAV (Net Asset Value). Now remember, GBTC trades at $540, so it's trading at a 104% premium to the underlying value of the Bitcoins it holds. Put another way, the Bitcoin euphoria is real, and this trades at twice that euphoria. The outcome will be humbling for those holding GBTC."

https://seekingalpha.com/article/4079232-bitcoin-amd-deja-vu

The comments section is hilarious.

[mmortal03]

"This bitcoin investment vehicle could be 'a disaster waiting to happen'": http://www.cnbc.com/2017/06/08/this-bitcoin-investment-vehicle-could-be-a-disaster-waiting-to-happen.html

[gentlemand]

"This bitcoin investment vehicle could be 'a disaster waiting to happen'": http://www.cnbc.com/2017/06/08/this-bitcoin-investment-vehicle-could-be-a-disaster-waiting-to-happen.html

Do they not have a point? It's not exactly liquid and becoming more tenuously related to the Bitcoin price by the day. The premium's gone from near nowt to near double. That's not a signal of a market that works very well.

[notme]

"This bitcoin investment vehicle could be 'a disaster waiting to happen'": http://www.cnbc.com/2017/06/08/this-bitcoin-investment-vehicle-could-be-a-disaster-waiting-to-happen.html

Do they not have a point? It's not exactly liquid and becoming more tenuously related to the Bitcoin price by the day. The premium's gone from near nowt to near double. That's not a signal of a market that works very well.

The premium is starting to come down.

Today:
BTCUSD up 5%
GBTC down 8%

[mmortal03]

GBTC is dropping like a rock today.

[mmortal03]

GBTC is dropping like a rock today.

Today has been even better.

[mmortal03]

GBTC is going up while BTC is going down. People are going to get rekt.

[mmortal03]

Looks like GBTC is finally dipping.