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 [email protected].
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 ..
Topic: GBTC Bitcoin Investment Trust Observer - page 4. (Read 262369 times)
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.
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?
I've still heard no word on an actual distribution date for Bitcoin Gold and 2x forks. Anyone else?
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.
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.
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.
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
Edit: After the very beginning discussion, the rest of the GBTC discussion starts here: https://youtu.be/R4oJngaKeQY?t=5629
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.
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.
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.
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".
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.
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.
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...
.
[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.
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.
[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.)
[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.)
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%.
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."
"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.
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