GBTC Bitcoin Investment Trust Observer

[CrazyLoaf]

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[plusalpha789]

IB screwed me over and I tried getting into Fidelity to buy the same asset before and they said IRAs *could not* use foreign currency (even if just swapping to a SEK-denominated asset) and they could not trade COINXBT.

There is a fellow on SeekingAlpha who recently was able to do the trade in an IRA at Fidelity: https://seekingalpha.com/article/4137459-bitcoin-altcoins-missing-wave?ifp=0&v=1516625100 (toward bottom, posts by Jim Craddock this afternoon)

[ktabb]

Does anyone know how many bitcoin GBTC holds? Can they prove that they have that amount? Is it in line with the fund's market cap?

[mmortal03]

Does anyone know how many bitcoin GBTC holds? Can they prove that they have that amount? Is it in line with the fund's market cap?

As of December 31st, it held 0.09181239 BTC per share. We're about to have a stock split, though, happening tomorrow, so this figure will no longer be accurate per share, but the amount of BTC will still be proportional to this after the 1 to 91 stock split.

[plusalpha789]

Does anyone know how many bitcoin GBTC holds? Can they prove that they have that amount? Is it in line with the fund's market cap?

Market cap is 1.63x the underlying bitcoin, that's why the Sweden and Stuttgart ETNs I posted about are a much better value, near zero premium instead of 63%.  As for them "proving" they have that amount, I don't know and it is a good question!  I do know that their holdings are not insured, so futures imo are safer (as well as being basically premium-free).

[Syke]

As of December 31st, it held 0.09181239 BTC per share. We're about to have a stock split, though, happening tomorrow, so this figure will no longer be accurate per share, but the amount of BTC will still be proportional to this after the 1 to 91 stock split.

https://www.prnewswire.com/news-releases/bitcoin-investment-trust-announces-stock-split-300581752.html

1,916,600 shares of the Trust issued and outstanding as of the date of this press release

So they should have about 176k btc now.

Most recent audit summary, for 2016:
https://www.sec.gov/Archives/edgar/data/1588489/000119312517158456/d157414ds1a.htm#fin157414_7

Bitcoins as of Dec 31 2016:
https://www.sec.gov/Archives/edgar/data/1588489/000119312517158456/d157414ds1a.htm#fin157414_9

172,094.67544221   

[ktabb]

Does anyone know how many bitcoin GBTC holds? Can they prove that they have that amount? Is it in line with the fund's market cap?

Market cap is 1.63x the underlying bitcoin, that's why the Sweden and Stuttgart ETNs I posted about are a much better value, near zero premium instead of 63%.  As for them "proving" they have that amount, I don't know and it is a good question!  I do know that their holdings are not insured, so futures imo are safer (as well as being basically premium-free).

63% premium is insane! I agree that futures are a better option, or directly owning crypto. It sounds like if bitcoin does really crash hard, GBTC holders will be hit the hardest.

[mmortal03]

63% premium is insane! I agree that futures are a better option, or directly owning crypto. It sounds like if bitcoin does really crash hard, GBTC holders will be hit the hardest.

One thing that's been convenient is that they've been doing dividend distributions for forks such as BCH, BTG, and B2X.

[DieJohnny]

Does anyone know how many bitcoin GBTC holds? Can they prove that they have that amount? Is it in line with the fund's market cap?

Market cap is 1.63x the underlying bitcoin, that's why the Sweden and Stuttgart ETNs I posted about are a much better value, near zero premium instead of 63%.  As for them "proving" they have that amount, I don't know and it is a good question!  I do know that their holdings are not insured, so futures imo are safer (as well as being basically premium-free).

63% premium is insane! I agree that futures are a better option, or directly owning crypto. It sounds like if bitcoin does really crash hard, GBTC holders will be hit the hardest.

Everyone knows other funds will come out and the premium will go away, but until then there is only one game in town. Lots of FUD to get people to share their GBTC, if we get true bear market territory (sub 9k) then you will see the premium disappear. Until then GBTC holders are betting the price goes up 60% before other funds come around.

[CrazyLoaf]

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[MrSunshine]

Does anyone know how many bitcoin GBTC holds? Can they prove that they have that amount? Is it in line with the fund's market cap?

Market cap is 1.63x the underlying bitcoin, that's why the Sweden and Stuttgart ETNs I posted about are a much better value, near zero premium instead of 63%.  As for them "proving" they have that amount, I don't know and it is a good question!  I do know that their holdings are not insured, so futures imo are safer (as well as being basically premium-free).

63% premium is insane! I agree that futures are a better option, or directly owning crypto. It sounds like if bitcoin does really crash hard, GBTC holders will be hit the hardest.

Everyone knows other funds will come out and the premium will go away, but until then there is only one game in town. Lots of FUD to get people to share their GBTC, if we get true bear market territory (sub 9k) then you will see the premium disappear. Until then GBTC holders are betting the price goes up 60% before other funds come around.

During the China FUD back in September, when BTC got cut in half almost overnight, GBTC still kept like a 75% premium. It is the only easy game in town, so the premium stays until a true ETF comes out. The SEC has said BTC appears dangerous so don't expect an ETF soon.

[MrSunshine]

Nice to see the GBTC spilt went off without a hitch. I was a little worried it might tank, but it finished with a 6% gain. It will be interesting to see how GBTC responds the next time BTC has big run up.

[Samarkand]

Nice to see the GBTC spilt went off without a hitch. I was a little worried it might tank, but it finished with a 6% gain. It will be interesting to see how GBTC responds the next time BTC has big run up.

I admit that I´m a little surprised about the whole price action surrounding the GBTC split.

After the announcement of the split the price increased by 12 % and now after the actual
split it increased by another 6 % as you pointed out. Maybe this is the same psychological
bias that was/is driving the rise of some high-supply altcoins. People just are more likely
to invest in something that appears cheap on the surface.

Besides, it is interesting that a single GBTC share now represents only a tiny 0.00101 Bitcoins.

[Bitcoinaire]

The split is bullish and many will jump in now that the price is low.

[plusalpha789]

Everyone knows other funds will come out and the premium will go away, but until then there is only one game in town.

GBTC IS NOT the only game in town, it is just the most expensive by far.  That was the whole point of this post: https://bitcointalk.org/index.php?topic=337486.msg28835640#msg28835640  As I write this, GBTC's premium to underlying bitcoin value is 74%, thanks to the split enabling a new cohort of buyers in the last couple days.  As word spreads that there are near-zero-premium alternatives available, that premium is going to come down.

[plusalpha789]

In any event, who is to say that Fidelity won't have the same policy soon regarding the Bitcoin ETNs? I mean this is the reason Interactive Brokers gave for blocking US investors from the Bitcoin ETNs:

"As a background, these securities have not been and will not be registered under the United States Securities Act of 1933 and, therefore, may not be held in an account of a resident of the United States."

I don't know what IB's real reason might be, but the reason they gave you is absolutely B.S.  I have in the past owned at IB securities that trade ONLY in Norway and ONLY in London and ONLY in Paris.  They were not registered under the 1933 Act but I could buy and hold them.  If there are any restrictions on a U.S. person owning a foreign security, the restrictions have to come from the originating country/stock exchange.

[plusalpha789]

It will be interesting to see how GBTC responds the next time BTC has big run up.

Sentiment can cut both ways.  What if the next 30% or whatever major move in bitcoin is to the downside, not the upside?  Then sentiment might push the 74% premium down.  I understand it has averaged 46%, and my bet (short GBTC, long a basket of crypto) is that as word spreads that there are near-zero-premium alternatives available, that premium will go well below 46%.

[plusalpha789]

[update: as of the close Tue. Feb. 6, GBTC closed at 12.31 per share, a 62.4% premium to its NAV of 7.58 per share]

[the below is an updated rewrite of post #2090]

GBTC’s absurdly high premium to NAV (74% as of the close Jan. 30) has been due to the false narrative that GBTC is the only available pure-play way of gaining exposure to bitcoin in an exchange-traded vehicle.  In fact, there are alternatives in Europe that trade at a near-zero premium to NAV, and these are available to U.S. investors, including IRAs, depending on the broker used.

GBTC is an ETN that has generally traded at a large premium to its underlying value of (post-split) 0.001008927 bitcoin (source https://grayscale.co/bitcoin-investment-trust/#overview).  As of the close Jan. 30, it traded for $17.51 per share (post the 91:1 split), compared to its underlying NAV of $10.07 per share (calculated by taking the 4 PM ET bitcoin price from bitstamp times 0.001008927 bitcoin per share). This represents a GBTC premium to underlying value of 73.9%. Buying some is somewhat like paying $174 for a $100 bill.

Historically, the premium has been due to the ficticious story that GBTC is the only available pure-play way of gaining exposure to bitcoin in an exchange-traded vehicle.  In fact, an alternative bitcoin ETN in Europe trades at a near-zero premium to NAV.  Just google “COINXBT”.   Some details, including ISIN etc., for the ETN trading in Sweden can be found here: http://www.nasdaqomxnordic.com/etp/etn/etninfo?Instrument=SSE109538.  And details for the sister ETN trading in Germany can be found here:
 http://www.nasdaqomxnordic.com/etp/etn/etninfo?Instrument=SSE113749.  NAVs can be found here: https://xbtprovider.com/.

Generally both trade close to NAV (e.g., zero premium), in contrast to the 74% premium for GBTC.  I have accounts at three brokerages.  Fidelity allows trading of both the European bitcoin ETNs.  Schwab does not.  Interactive Brokers does not (although it used to).  I even placed a small order, which executed, at Fidelity (not more because I am already long a basket of crypto and don’t need more and would prefer futures over an ETN anyway).  Here is a link to a screenshot of a that completed trade: https://imgur.com/a/fkK9b

I also confirmed with Fidelity that both the Sweden-traded and the sister Stuttgart-traded ETNs can be held in IRAs.  This last point is key.  After bitcoin futures became available in the U.S. last month, GBTC "premium apologists" claimed that the GBTC premium was justified, as GBTC was the only way of getting pure bitcoin exposure into an IRA.  That is not true.

Details at Fidelity are as follows.  Taxable accounts can execute online, the Fidelity-specific symbols are BITCOIN_XBT:SE (trading in Sweden, in krona) and BITCOIN_XBTE:SE (trading in Germany, in euro).  For an IRA, the trade can only be placed with a human, not online, by calling their international desk at 800-544-2976, so the commission is higher than for online trades in a taxable account.  To trade the ETNs online at Fidelity, make sure your account is enabled for international trading, then hover over "Accounts & Trade" until you get the dropdown > select "Trade" > click the "International" tab > then enter one of the Fidelity-specific symbols such as "BITCOIN_XBT:SE".  

I only checked with Fidelity, Schwab, and IB, so I don't know which other brokers, besides Fidelity, might offer trading in these ETNs.  Perhaps if readers find others, the information could be added in comments below.

There are also sister exchange-traded Ethereum vehicles, similarly available to U.S. investors (including IRAs) via Fidelity (and possibly other brokers).  You can google “Ethereum XBT” or “COINETH”.  Details can be found at http://www.nasdaqomxnordic.com/etp/etn/etninfo?Instrument=SSE144580 (trading in Sweden in krona) and http://www.nasdaqomxnordic.com/etp/etn/etninfo?Instrument=SSE144581 (trading in Stuttgart in euro).  https://xbtprovider.com/ provides NAVs.  Like the European bitcoin ETNs, these Ethereum ETNs trade very close to NAV, instead of the substantial premium that GBTC trades at in the U.S. vs. its underlying value in bitcoin.  The availability of these to U.S. investors is another reason that GBTC's current 74% premium to NAV might come down.  At Fidelity, taxable accounts can execute online, the Fidelity symbols are ETHEREUM_XBT:SE (trading in Sweden in krona) and ETHEREUM_XBTE:SE (trading in Stuttgart in euro).  To trade the ETNs online at Fidelity, make sure your account is enabled for international trading, then hover over "Accounts & Trade" until you get the dropdown > select "Trade" > click the "International" tab > then enter one of the Fidelity-specific symbols such as " ETHEREUM_XBT:SE".  If you need to trade in an IRA, call their international desk at 800-544-2976.

In summary, given that GBTC sells for a premium to its underlying bitcoin value of 74%, or about $7.44 per share, every 100 shares of GBTC sold at that premium and replaced with COINXBT can save the investor roughly $744 before commissions/fees.  If you own, or have been considering, GBTC as a long, check with your broker…if yours doesn’t allow trading of COINXBT/ COINETH instead of GBTC, it might be worthwhile finding one who does…as long as the high GBTC premium persists, that is.  Consider either transferring your account to Fidelity (or some other broker who allows the trades) or open and maintain an additional account to whatever you have now;  in my opinion, saving 74% is worth it.  Transferring an account in its entirety is barely more work than opening a new account.  We think the premium is likely to begin compressing once this information is more broadly disseminated.

If you are a super-bull on bitcoin and believe it will eventually go to $100,000 or $1,000,000, it is a pretty sure bet that by the time it gets there, the SEC’s issues with true bitcoin ETFs will have been satisfied, and we will have true bitcoin ETFs on the market…which will have driven the GBTC premium to zero.  If instead of GBTC you buy a zero-premium alternative now, you will have 1.74 times the underlying ownership for the same dollar cost…and 1.74 times the profit down the road.

DISCLOSURE:  I/we are short shares of GBTC, and long a basket of cryptocurrencies.  (The hedge isn’t purely bitcoin because we believe Ethereum and certain other cryptocurrencies will outperform bitcoin.)  

[mmortal03]

[this is an updated rewrite of post #2090]

GBTC’s absurdly high premium to NAV (74% as of the close Jan. 30) has been due to the false narrative that GBTC is the only available pure-play way of gaining exposure to bitcoin in an exchange-traded vehicle.  In fact, there are alternatives in Europe that trade at a near-zero premium to NAV, and these are available to U.S. investors, including IRAs, depending on the broker used.

Who is consistently presenting this false narrative, though? It doesn't have to be the "only available pure-play way of gaining exposure to bitcoin" for it to still be the one that is *most* available to investors.

[CrazyLoaf]

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