Topic: GBTC Bitcoin Investment Trust Observer - page 54. (Read 262371 times)
This file available on the OTCQX page, dated Sep 30 2013, describes how the fund works and its the situation as of that date (shortly before redemptions were suspended).
the order book now looks more like the other stocks.
http://www.otcmarkets.com/stock/GBTC/quote
We see the bids from the different brokerages.
http://www.otcmarkets.com/stock/GBTC/quote
We see the bids from the different brokerages.
Indeed, the 30+ price is now "N/A" and there is a bid at the bottom for 100 shares at 20.00 $/share (meaning 200 $/BTC). Hm.
EDIT: more bids, up to 31.50 $/share (315 $/BTC)
Any why aren't the bid matched? Lacking liquidity? But the bids I can see are in the range of at most 1000 shares, which means, it's that's basically nothing.
AFAIK trading has not started yet. That number may be just the share's nominal value, copied down at some past date.
As I understand, when trading starts, their current clients who have held shares for more than 12 months will be allowed to offer them for sale through brokers, and OTCQX will record the price. One authorized primary broker will also be allowed to buy additional shares for sale through other brokers. (I don't know whether that primary broker would have to wait 12 months too.)
They currently look like they might just be test bids.
Maybe because its been a month? But the order book now looks more like the other stocks.
http://www.otcmarkets.com/stock/GBTC/quote
We see the bids from the different brokerages.
But don't be fooled that people are willing to pay 26% over market. And we don't see asks out yet. (Delivery of the shares)
Maybe because its been a month? But the order book now looks more like the other stocks.
http://www.otcmarkets.com/stock/GBTC/quote
We see the bids from the different brokerages.
But don't be fooled that people are willing to pay 26% over market. And we don't see asks out yet. (Delivery of the shares)
I noticed http://www.otcmarkets.com/stock/GBTC/quote went from OTXPink to OTXQX this time and isn't hiding the bids with latest $31.50.
There are ~10 shares per bitcoin held, correct? So the visible bids on otcmarkets.com are well above "market" considering the 10:1 ratio and current exchange market price, correct as well?
Someone who knows more about BIT, and investment trusts in general, can try to explain this?
Order book padding by the fund owners themselves? (Would seem very, very risky, so I doubt it).
Any why aren't the bid matched? Lacking liquidity? But the bids I can see are in the range of at most 1000 shares, which means, it's that's basically nothing.
Anyone else wants to speculate on this, or explain it to me?
I noticed http://www.otcmarkets.com/stock/GBTC/quote went from OTXPink to OTXQX this time and isn't hiding the bids with latest $31.50.
That bid price has been there for a while. It may be just a placeholder.
Bitcoin, land of the hype.
I noticed http://www.otcmarkets.com/stock/GBTC/quote went from OTXPink to OTXQX this time and isn't hiding the bids with latest $31.50.
Any info?
Anyone know when people will be getting their shares?
In a "few weeks" TM.
It will be interesting to see that. Hopefully in early April.
Having skimmed the recently released interim financial report ( http://www.otcmarkets.com/stock/GBTC/filings ) the answers to the question about redemptions appears to be:
* The trust intended to (and started to) allow redemptions by authorized participants; however they had to suspend redemptions due to an SEC ruling. This appears to be due to a technicality (I get the impression that the rules under which the trust is operating weren't really designed with ETF-style trusts in mind). It appears the trust desires to resume redemptions but it's not clear if or when the legal situation will be resolved.
* A winding up resolution requires shareholders representing 75% of shares to vote in favour
* The trust intended to (and started to) allow redemptions by authorized participants; however they had to suspend redemptions due to an SEC ruling. This appears to be due to a technicality (I get the impression that the rules under which the trust is operating weren't really designed with ETF-style trusts in mind). It appears the trust desires to resume redemptions but it's not clear if or when the legal situation will be resolved.
* A winding up resolution requires shareholders representing 75% of shares to vote in favour
BIT didn't win a single lot... They will need to buy more on market probably 
http://www.bloomberg.com/news/articles/2015-03-06/secondmarket-failed-to-win-bitcoins-in-latest-government-auction
http://www.bloomberg.com/news/articles/2015-03-06/secondmarket-failed-to-win-bitcoins-in-latest-government-auction
So you expect that the fund will not be required to redeem, unless all holders vote to close the fund (as you explained in the preceding post)?
Well, majority of holders rather than all holders, but yes, that's probably how I'd expect it to work (at least that's how investment trusts usually work). It's generally only with ETFs (a much more recent type of financial structure) that shares can be redeemed - and this isn't an ETF.
That said, I'm just guessing here - I haven't read the prospectus.
Also, another option typically available to managers of an investment trust trading at a discount is a share buyback (but I don't know if this option is open to BIT under FINRA rules).
In this scenario, when an investment trust is trading at a substantial discount for a prolonged period of time, the managers sell some of the assets (in this case bitcoins) and use the money to buy back shares in the trust. The shares they buy are cancelled (i.e. they cease to exist). So the trust now owns fewer bitcoins, but it also has fewer shares - so the number of bitcoins per share stays roughly the same. Actually, because they got a good price on the shares they bought back (they were trading at a discount, remember) the number of bitcoins per share actually goes up slightly. But more importantly, they're creating buying pressure in the market - and they can keep doing this until the discount is eliminated.
In this scenario, when an investment trust is trading at a substantial discount for a prolonged period of time, the managers sell some of the assets (in this case bitcoins) and use the money to buy back shares in the trust. The shares they buy are cancelled (i.e. they cease to exist). So the trust now owns fewer bitcoins, but it also has fewer shares - so the number of bitcoins per share stays roughly the same. Actually, because they got a good price on the shares they bought back (they were trading at a discount, remember) the number of bitcoins per share actually goes up slightly. But more importantly, they're creating buying pressure in the market - and they can keep doing this until the discount is eliminated.
This is what I understood that "redemption" meant, except that I was assuming it would happen by decision of the share holder (possibly restricted to the primary broker or whatever) rather than by choice of the fund's manager.
So you expect that the fund will not be required to redeem, unless all holders vote to close the fund (as you explained in the preceding post)?
Also, another option typically available to managers of an investment trust trading at a discount is a share buyback (but I don't know if this option is open to BIT under FINRA rules).
In this scenario, when an investment trust is trading at a substantial discount for a prolonged period of time, the managers sell some of the assets (in this case bitcoins) and use the money to buy back shares in the trust. The shares they buy are cancelled (i.e. they cease to exist). So the trust now owns fewer bitcoins, but it also has fewer shares - so the number of bitcoins per share stays roughly the same. Actually, because they got a good price on the shares they bought back (they were trading at a discount, remember) the number of bitcoins per share actually goes up slightly. But more importantly, they're creating buying pressure in the market - and they can keep doing this until the discount is eliminated.
Investment trusts have been around since 1868 and they do generally work - this isn't some kind of whacky new financial instrument. EDIT: Don't expect it to track the bitcoin price perfectly, though. Discounts or premiums of +/-10% are not unusual for investment trusts, depending on market conditions.
In this scenario, when an investment trust is trading at a substantial discount for a prolonged period of time, the managers sell some of the assets (in this case bitcoins) and use the money to buy back shares in the trust. The shares they buy are cancelled (i.e. they cease to exist). So the trust now owns fewer bitcoins, but it also has fewer shares - so the number of bitcoins per share stays roughly the same. Actually, because they got a good price on the shares they bought back (they were trading at a discount, remember) the number of bitcoins per share actually goes up slightly. But more importantly, they're creating buying pressure in the market - and they can keep doing this until the discount is eliminated.
Investment trusts have been around since 1868 and they do generally work - this isn't some kind of whacky new financial instrument. EDIT: Don't expect it to track the bitcoin price perfectly, though. Discounts or premiums of +/-10% are not unusual for investment trusts, depending on market conditions.
So, will shares be eventually redeemable from SMBIT at their nominal value (0.1 of current BTC market price)? By brokers, if not by original investors?
At a guess (not having seen the prospectus) probably only en masse. Typically with an investment trust, shareholders can petition to have a winding up vote [probably only possible after some sunset date, though]. If the trust is consistently trading at a discount (i.e. the shares are worth less that the underlying assets) then it's in the interest of shareholders to vote to wind up the trust. When this happens, the trust has to sell all its assets and distribute the proceeds to the shareholders. Obviously it's not in the interests of the shareholders to wind up the trust unless the shares are consistently trading at a significant discount (i.e. the shares are worth less than the underlying assets).
Generally this possibility is enough to keep things stable and create confidence in the trust, and make it track the underlying assets, at least very roughly.
SEC Filings.
http://www.sec.gov/Archives/edgar/data/1588489/000158848915000002/xslFormDX01/primary_doc.xml
March 4th, 2015
Raised $61,915,960
Slightly different from estimate on this graph.
http://www.ic.unicamp.br/~stolfi/temp/2015-02-12-plot.png
http://www.sec.gov/Archives/edgar/data/1588489/000158848915000002/xslFormDX01/primary_doc.xml
March 4th, 2015
Raised $61,915,960
Slightly different from estimate on this graph.
http://www.ic.unicamp.br/~stolfi/temp/2015-02-12-plot.png
Thanks for the link!
Actually I am surprised that my estimated total investment (~67.8 M$) was so close.
The graph (magenta line) was computed by adding the estimated net USD investment on each date. They do not give that data direcly. User @jl2012 estimated the net amount of BTC bought on each date, by the method described on page 1 of this thread. I estimated the net USD investment by multiplying that amount by the NAV on the same date. Both estimates surely included some error. All those errors added to about 5900 $, it seems.
Since the net assets are worth ~34 M$, the average investor still has a paper loss, but somewhat smaller than I had estimated: -45% instead of -50%.
SEC Filings.
http://www.sec.gov/Archives/edgar/data/1588489/000158848915000002/xslFormDX01/primary_doc.xml
March 4th, 2015
Raised $61,915,960
Slightly different from estimate on this graph.
http://www.ic.unicamp.br/~stolfi/temp/2015-02-12-plot.png
http://www.sec.gov/Archives/edgar/data/1588489/000158848915000002/xslFormDX01/primary_doc.xml
March 4th, 2015
Raised $61,915,960
Slightly different from estimate on this graph.
http://www.ic.unicamp.br/~stolfi/temp/2015-02-12-plot.png
Anyone know when people will be getting their shares?
In a "few weeks" TM.
Anyone know when people will be getting their shares?
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