Why are investors buying GBTC?
GBTC is a Bitcoin Investment Trust run by Grayscale Investments. Investing in the trust is intended to be the same as investing in bitcoin. It would appear that investing in the trust this morning would have been a really smart thing to do. After all, the price of GBTC went from $309 to $384 today! That's a return of 24%!
How did Bitcoin do today between the hours of 9:30am EST to 4pm EST, which is the time you could have traded GBTC since it's on an American exchange. According to GDAX, the price of bitcoin was about $2,330 at 9:30am EST and about $2,330 at 4pm EST. That's exactly the same price.
How the hell can GBTC go up 24% when bitcoin opened and closed at the same price!!
My guess is that the people buying GBTC don't have a clue about what it is. I don't blame them, because the information isn't available on the obvious website where you would expect it to be.
If you google GBTC, the first two results are Yahoo Finance and Marketwatch.
Yahoo Finance does not provide any info on what GBTC actually represents. There is a "Profile" tab, I have never been able to get that to load for GBTC.
Marketwatch, the second Google result, shows much more than Yahoo Finance. Unfortunately, the MarketWatch info is fake news. GBTC doesn't have a price to book of 1.34, does not have a PE ratio of 7.55, etc. Looks like their system is picking info for a stock...not sure what that info corresponds to, but it's not for GBTC.
SeekingAlpha is another top result with the same lack of information.
OTCMarkets.com and Grayscale.co, which are down at the bottom of the search show the real story.
If you scroll to the bottom of the GBTC page on Grayscale's website, you see that each share of GBTC represents 0.09289534 bitcoin. Based on the 4pm EST price of bitcoin, each share of GBTC was worth $216. GBTC closed at $384. That means buyers were willing to pay a 78% premium for each share!
Historically, the premium buyers were willing to pay for GBTC over the actual price of Bitcoin was roughly 5%. That changed around the 3rd week of May, when it spiked to above 100%. It was down to about 55% until it went up to 78% today.
Who is buying GBTC?
I wish I knew, because I would sell them bitcoin for only 50% premium, maybe even 45% if they want to negotiate. Great deal for both of us! GBTC is sold on OTC (Over the counter markets), which means there is no central exchange like there is for normal stocks. Searching online, the only big names I saw that offered OTC trading in the US was Scottrade and Fidelity. I haven't confirmed if Scottrade specifically allows you to purchase GBTC, but I do know that Fidelity does.Why do I care?
Full disclosure, my 401k is through Fidelity, who recently become very pro bitcoin and pro crypto currency. As of less than a month ago, Fidelity allows trading of GBTC. I would love to buy GBTC to diversify my retirement portfolio. If the premium ever calms down to below 20%, I am ready to BUY BUY BUY!Sadly, I don't think it will anytime soon. GBTC is the only game in town right now. It doesn't look like a Bitcoin ETF will be approved anytime soon, so I may be waiting until other OTC Crypto Funds pop up.
It's all abut perceived value. Some people have no clue how to set up an account on an exchange but they do have a broker who they can call and say buy me some bitcoin to.
My assumption is the recent surge in price has renewed confidence in Bitcoin to traditional investors. That and the fact it's survived for so long, the first mover and has a high amount of liquidity amongst exchanges does bring an appealing investment opportunity.
So basically the people who view this from the outside see GBTC as a safer entry into the cryptocurrency market as it's slightly more regulated than putting your money on an exchange or working out how to work a wallet, but I could be wrong.
Yeah for sure
Yes you could be wrong, but you might be right? A constant debate over the "true" value of anything is why we even have a market. I'm not sure if I agree or not yet, I 'll have to do some more research. But your opinion has made me want to check out this theory form myself. Thank you for leaving thought provoking comments like this. A great contribution to help all of us who are trying to stay on top of the crypto economy. I have just followed you for more valuable insight. Keep the comments coming @ardy.
well it sounds like its too early in the game ...i think i would wait and see about that one.....there is too many other ways to make money
There are other options, but somewhat limited in a 401k.
Another great article by @financialcritic. I feel the same about STEEM self off's. Do people realise the value of what they are selling? Do they even know what steemit is, and how big it's going to be?
Some people just don't want to make money!
Nice blog. Same thoughts here. There's a lot of exchanges out there. I found that coinmarketcap.com gives quite a decent overview. An interesting website I found: https://www.coincheckup.com They seem to give this complete indepth analysis of all cryptocoins. Sorted by team, product, company, advisors, previous investors, etc. See: https://www.coincheckup.com/coins/Bitcoin#analysis For a complete Bitcoin Detailed analysis
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