GBTC Bitcoin Investment Trust Observer

[plusalpha789]

Who is consistently presenting this false narrative, though?

Some of the pumpers appearing on CNBC, such as Tom Lee and Chamath Palihapitiya.  Some people on SeekingAlpha.  And some of the idiots on StockTwits too.

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.

*most* investors it is true don't use Fidelity, but *all* of those investors could move their accounts to Fido, or open new ones there.  Saving a 54% premium by buying COINXBT (or COINETH) instead of GXBT makes such a move worthwhile, imo.  Even if someone is a very small investor, and owned 1 pre-split / 91 post-split shares, worth $1418 at yesterday's close, there is a potential $495 savings...which for a *small* investor, potentially is very significant.  And if someone has 910 or 9100 or 91,000 shares...

[plusalpha789]

In that premium, GBTC still has payments for Bitcoin Gold and Bitcoin Segwit2x baked into the price (so that could be another say $600 a BTC depending on when GBTC sold them).

Not so.  The Bitcoin Gold dividend had a record date of Dec 4.The Segwit2x dividend had a record date of Jan. 8.  So any buyer of GBTC after Jan. 8 gets neither of those payouts, including those who bought at a 54% premium at the close yesterday, or a 74% premium the day before.

COINXBT *still* has not paid for Bitcoin Cash and they sold at a pathetically low rate anyway (around $300) compared to GBTC's better ~$1300 or so.

OK but was that skill or luck?  Is it repeatable with future forks?  If COINXBT sells its forked crypto consistently faster than GBTC, then if a fork happens when we are in a generally down market for crypto, that speed will help not hurt you with COINXBT.

Hell, even in the scant amount of retirement funds that offer "brokerage" trading on individual stocks (which probably takes weeks/months for an employee to get approval through their idiotic HR/benefits department), I bet they don't allow exposure to foreign currency-denominated investments like COINXBT.

There is a fellow on SeekingAlpha who recently was able to buy COINXBT in an IRA at Fidelity: https://seekingalpha.com/article/4137459-bitcoin-altcoins-missing-wave?ifp=0&v=1516625100 (toward bottom of the comments section, post by Jim Craddock 25 Jan 2018, 01:50 PM).

Honestly, the premium will remain. Close your short and go long BTC, fine, but don't try to short GBTC

The premium came down 20 percentage points yesterday.  Some part of that could be due to my continuing efforts to spread the word about the zero-premium alternatives.  As the word spreads, I think the premium will come down further.  And I don't find it TOO risky because I am long a basket of crypto;  in fact since I am NET long (long basket exceeds short GBTC), the greater risk to me is that Ethereum et al continue to go down.

[valkener]

I think most people use their ira/roth ira on fidelity to buy GBTC. I don't think they can buy COINXBT on fidelity if it's an IRA? At least I cannot see it and I only have Stocks/ETF available. So the big part of GBTC are IRA's.

[plusalpha789]

I think most people use their ira/roth ira on fidelity to buy GBTC. I don't think they can buy COINXBT on fidelity if it's an IRA? At least I cannot see it and I only have Stocks/ETF available. So the big part of GBTC are IRA's.

You can do it, and it has been done.  Quoting from post 2118:

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". 

[plusalpha789]

Finally, I am now on the hook for major taxes due to IB's blocking/removal and forced liquidation of the COINXBT product.

I mentioned a few posts ago that IB's stated reason makes 0 sense.  If they gave you no warning, you might want to take them to arbitration over it.  Arguably they should have given you the opportunity to find a broker like Fidelity to transfer the position to.

[DieJohnny]

The premium came down 20 percentage points yesterday.  Some part of that could be due to my continuing efforts to spread the word about the zero-premium alternatives.  As the word spreads, I think the premium will come down further.  And I don't find it TOO risky because I am long a basket of crypto;  in fact since I am NET long (long basket exceeds short GBTC), the greater risk to me is that Ethereum et al continue to go down.

Premium has been nearly zero in the past bearish stretches, it is just how GBTC prices. The premium is created when demand is highest, which is during bull runs. A good strategy is buying GBTC whenever premium is less than 15% and selling whenever it goes over 85% premium. Rinse and repeat.

[plusalpha789]

A good strategy is buying GBTC whenever premium is less than 15% and selling whenever it goes over 85% premium. Rinse and repeat.

That sounds wise.  Premium ended today at 43%, so we still have some more premium compression to go before I'd consider buying/covering.  I do think that the range going forward might be lower than the 15-85% you suggest, because very few U.S. investors had previously known that they could trade the zero-premium European alternatives, and more and more will know over time.

[mmortal03]

GBTC discussed on this one: https://www.youtube.com/watch?v=R4oJngaKeQY

Edit: After the very beginning discussion, the rest of the GBTC discussion starts here: https://youtu.be/R4oJngaKeQY?t=5629

[DieJohnny]

A good strategy is buying GBTC whenever premium is less than 15% and selling whenever it goes over 85% premium. Rinse and repeat.

That sounds wise.  Premium ended today at 43%, so we still have some more premium compression to go before I'd consider buying/covering.  I do think that the range going forward might be lower than the 15-85% you suggest, because very few U.S. investors had previously known that they could trade the zero-premium European alternatives, and more and more will know over time.

Windows of less than 15% has been very short lived in the past 15 months. You have to be fearless and be committed when it drops. I know that sooner or later the premium will evaporate, probably over night. As a result I am less and less willing to go big on GBTC.  If only I could just see the future.

[mmortal03]

plusalpha789,

Regarding COINXBT and COINXBE, I'm not an expert on international stock trading, but can I assume that you're looking at any sort of exchange rate fluctuations between USD and the krona or euro as being unimportant relative to the volatility of the bitcoin price itself?

Also, the following shows the commissions. (https://www.fidelity.com/stock-trading/faqs-international)

Swedish stock trades placed online are 180 SEK (about $22), and assisted through a rep (assuming for the IRA) are 480 SEK (about $59). For Euro trades, it looks to be 19 Euros online, and 50 euros when assisted through a rep. On top of this, they mention that if you choose U.S. dollars as the settlement currency, a foreign currency exchange fee will be charged, which are between 20 and 100 basis points.

They state: "If you plan on trading regularly in a specific market, you may want to consider exchanging a certain amount of currency to avoid currency exchange fees on each trade. For example, let’s say you plan on trading primarily in Hong Kong. Rather than settle your trades in U.S. dollars and pay a foreign currency exchange fee on each transaction, you could do a single, larger currency exchange transaction of your U.S. dollars into Hong Kong dollars.* This would allow you to settle each trade in the local currency, Hong Kong dollars, which may allow you to potentially reduce your overall trading costs. *Note: A currency exchange fee would still apply to the initial currency exchange from U.S. dollars to Hong Kong dollars."

Another thing to keep in mind is that now that GBTC has done its stock split, this allows for much more granularity on GBTC as compared to COINXBT, not withstanding GBTC's own issues.

I'm interested to know whether there are any important tax implications when trading international stocks such as these, as well. They do state the following, which I assume would apply to any future forked dividends (have they even paid out any forked dividends yet for BCH or BTG?): "Countries generally impose withholding taxes on dividends paid to foreigners. Many countries—including the United States—offer a dollar-for-dollar tax credit for the amount withheld to avoid double taxation of these funds."

Having to trade on the hours of these international markets is also going to be an important consideration for some people.

[nailo]

I've still heard no word on an actual distribution date for Bitcoin Gold and 2x forks.  Anyone else?

[mmortal03]

I've still heard no word on an actual distribution date for Bitcoin Gold and 2x forks.  Anyone else?

I think the BTG distribution would come out by next Monday if they stayed within the timeframe that they originally announced, but who knows?

[plusalpha789]

plusalpha789,

Regarding COINXBT and COINXBE, I'm not an expert on international stock trading, but can I assume that you're looking at any sort of exchange rate fluctuations between USD and the krona or euro as being unimportant relative to the volatility of the bitcoin price itself?

Also, the following shows the commissions. (https://www.fidelity.com/stock-trading/faqs-international)

Swedish stock trades placed online are 180 SEK (about $22), and assisted through a rep (assuming for the IRA) are 480 SEK (about $59). For Euro trades, it looks to be 19 Euros online, and 50 euros when assisted through a rep. On top of this, they mention that if you choose U.S. dollars as the settlement currency, a foreign currency exchange fee will be charged, which are between 20 and 100 basis points.

They state: "If you plan on trading regularly in a specific market, you may want to consider exchanging a certain amount of currency to avoid currency exchange fees on each trade. For example, let’s say you plan on trading primarily in Hong Kong. Rather than settle your trades in U.S. dollars and pay a foreign currency exchange fee on each transaction, you could do a single, larger currency exchange transaction of your U.S. dollars into Hong Kong dollars.* This would allow you to settle each trade in the local currency, Hong Kong dollars, which may allow you to potentially reduce your overall trading costs. *Note: A currency exchange fee would still apply to the initial currency exchange from U.S. dollars to Hong Kong dollars."

Another thing to keep in mind is that now that GBTC has done its stock split, this allows for much more granularity on GBTC as compared to COINXBT, not withstanding GBTC's own issues.

I'm interested to know whether there are any important tax implications when trading international stocks such as these, as well. They do state the following, which I assume would apply to any future forked dividends (have they even paid out any forked dividends yet for BCH or BTG?): "Countries generally impose withholding taxes on dividends paid to foreigners. Many countries—including the United States—offer a dollar-for-dollar tax credit for the amount withheld to avoid double taxation of these funds."

Having to trade on the hours of these international markets is also going to be an important consideration for some people.

Yes, the transaction fees for COINXBT and COINETH are higher than for US-traded stocks, which might be an issue if a transaction if VERY small.

F/X risk (which cuts both ways, as imo there is a 50% chance it will work in the investor's favor) to me pales in comparison to the volatility inherent in the cryptos.  Investors concerned about risk should consider the risk that buying GBTC at a 75% premium to NAV might later involve selling at a lower, perhaps much lower, premium.

In my experience every dollar paid in foreign dividend witholding tax gets recouped 100% with a tax credit from Form 1116.

[mmortal03]

Record date for BTG was December 4, 2017, and they were going to sell the tokens over a period of time, currently not expected to exceed 90 days. I think today is day 91.

[WasTriffin]

NEW YORK, March 6, 2018 /PRNewswire/ --


Grayscale Investments, LLC ("Grayscale"), a trusted authority on digital currency investing, announced today the launch of four new investment products including Bitcoin Cash Investment Trust, Ethereum Investment Trust, Litecoin Investment Trust, and XRP Investment Trust (each, a "Trust," and collectively, the "Trusts").  As of February 28, 2018, Grayscale had $2.1 billion in assets under management.

"We are thrilled to expand Grayscale's offerings to meet rising investor demand," said Michael Sonnenshein, Managing Director at Grayscale. "Our team is committed to bridging the gap between the global investment community and the digital currency asset class. We remain focused on product creation and will continue to launch more single-asset and diversified products to provide exposure where investors are looking for it."

Each of the Trusts' shares are among the first securities solely invested in Bitcoin Cash ("BCH"), Ethereum ("ETH"), Litecoin ("LTC"), and Ripple ("XRP"), respectively. The investment objective of each Trust is for the shares to reflect the value of BCH, ETH, LTC, and XRP, respectively, held by each Trust, as determined by reference to the TradeBlock index for each digital asset at 4:00 p.m. New York time, less each Trust's expenses and other liabilities. Grayscale believes that the shares represent a cost-effective and convenient way to gain digital asset exposure relative to a direct investment in digital assets.

The Trusts do not currently operate a redemption program. As a result, there can be no assurance that the value of the shares will approximate the value of the respective digital asset held by each Trust and the shares may trade at a substantial premium over, or discount to, the value of the digital assets held by each Trust, if traded on any secondary market in the future.

Each Trust is a Delaware statutory trust based in the United States. The private placements of shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or any state securities laws, and the shares are being offered pursuant to an exemption from registration provided by Rule 506(c) of Regulation D under the Securities Act and in reliance on similar exemptions under applicable state laws. An investment in the shares of the Trust is suitable only for sophisticated investors, and the Trusts are offering shares on an ongoing basis only to certain "accredited investors" within the meaning of Rule 501(a) of Regulation D of the Securities Act. Investors will be required to represent that they are "accredited investors" as such term is defined therein. The shares are only available for purchase through certain authorized participants engaged by Grayscale on behalf of each Trust.

As described more fully in each Trust's private placement memorandum, an investment in any of the Trusts is highly speculative in nature. In addition, each Trust's shares are subject to a one-year holding period in accordance with Rule 144 under the Securities Act before they can be resold without restriction. Because of the one-year holding period and the lack of an ongoing redemption program, shares should not be purchased by any investor who is not willing and able to bear the risk of investment and lack of liquidity for at least one year. No assurances are given that after the one year holding period, there will be any market for the resale of shares, or, if there is such a market, as to the price at which such shares may be sold into such a market. Please read the private placement memorandum for each Trust carefully for a discussion of these and other risks.

This press release does not constitute an offer to sell or a solicitation of an offer to purchase these securities, nor should there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. Offers to sell each Trust's shares are made solely pursuant to each Trust's private placement memorandum.

Qualified investors should refer to each Trust's private placement memorandum, which is available from Grayscale. For further information, please contact info@grayscale.co.

About Grayscale Investments, LLC

Established in 2013 by Digital Currency Group, Grayscale Investments, LLC ("Grayscale") is a trusted authority on digital currency investing. Grayscale provides secure access to the digital currency asset class through its single-asset and diversified investment products, including Bitcoin Investment Trust (GBTC) and Digital Large Cap Fund. As of February 28, 2018, the firm managed $2.1 billion in assets. For more information on Grayscale, please visit www.grayscale.co.


WasTriffin ..

[mmortal03]

Link: https://www.prnewswire.com/news-releases/grayscale-investments-announces-launch-of-bitcoin-cash-investment-trust-ethereum-investment-trust-litecoin-investment-trust-and-xrp-investment-trust-300609004.html

[nailo]

C'mon GBTC, I wanna buy this dip.  Give me my distribution!   

[MrSunshine]

Link: https://www.prnewswire.com/news-releases/grayscale-investments-announces-launch-of-bitcoin-cash-investment-trust-ethereum-investment-trust-litecoin-investment-trust-and-xrp-investment-trust-300609004.html

Yea, it looks like you need to be an accredited investor however, so many can't participate. Same thing with the new coinbase fund.

[mmortal03]

Link: https://www.prnewswire.com/news-releases/grayscale-investments-announces-launch-of-bitcoin-cash-investment-trust-ethereum-investment-trust-litecoin-investment-trust-and-xrp-investment-trust-300609004.html

Yea, it looks like you need to be an accredited investor however, so many can't participate. Same thing with the new coinbase fund.

Gotta wait a year.

[WasTriffin]

NEW YORK, April 2, 2018 /PRNewswire/ --

Grayscale Investments, LLC, in its role as agent (the "Agent") of the shareholders of record as of December 4, 2017 (the "Record Date Shareholders") of Bitcoin Investment Trust (GBTC) (the "Trust"), announced today that, on behalf of the Record Date Shareholders, it has completed the liquidation of approximately 172,244  Bitcoin Gold tokens, the rights to which were distributed to the Record Date Shareholders on December 4, 2017.

On December 4, 2017, pursuant to the terms of the Trust Agreement governing the Trust, the Trust, acting on behalf of the Record Date Shareholders, appointed the Agent and distributed all of the rights to Bitcoin Gold tokens then held by the Trust to the Record Date Shareholders by transferring such rights to the Agent.

On March 14, 2018, the Bitcoin Gold tokens became accessible to the Agent. On behalf of the Record Date Shareholders, the Agent subsequently exercised the rights it held with respect to the Bitcoin Gold tokens and liquidated the Bitcoin Gold tokens over a period of 14 days.

In connection with the foregoing, the Agent will remit the cash proceeds from the liquidation of the Bitcoin Gold tokens, net of the administrative and other expenses incurred by the Agent in connection with the liquidation, to the Record Date Shareholders on April 3, 2018. Each Record Date Shareholder will receive $0.056478 per share.

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WasTriffin ..