Topic: $GBTC Speculation, Information, and Cogitation - page 6. (Read 11792 times)

Yup GBTC is like a black box.  There is totally limited supply right now.  And the demand for that limited supply could be huge.

Also no $49 bids got filled.

Interesting analysis... I've been watching these first days very closely and your explanation of the premium sounds reasonable, hadn't thought of that.

Maxim is testing the market.
They put their Bid at $49 to see if the market will follow them down.
If they are rewarded for their efforts, I would expect them to rinse and repeat the experiment.
I think they're trying to accelerate the price discovery, let someone else soak up some shares, in case the final settled price is lower.

30 minutes left for the day's trading, very interested to see relative volume and price moves.
13,569 shares as of now.

This is another one of those pure speculation, here's what's going on in my head posts.
Wanted to share my recent theorization. This is an interesting market dynamic.

There is no guarantee that any actor is correct. But I do feel understanding motives gives insight into how the market may behave down the road.

The million dollar question right now seems to be

"WHY are people paying these 100+% premiums? Who does that?"

I couldn't quite put my finger on it either.
There are lots of pieces, and I'm unfamiliar with most.
OTC. BIT holders converting shares after 12 month holding period. Tax deferred benefits.  Value-add for convenience, safety, etc.

Put a black box around all that, and call it valuation.  WHY are people willing to pay 100% premium?

I nearly liquidated my small existing position when I had the next thought:

As soon as COIN hits the market, GBTC will have a far more liquid, high volume competitor.  The only possible way the premium could remain is if (close to) the same premium exists for COIN.
I thought, surely this means we will rocket down to current-BTC prices.
But we haven't.
Sure I just realized these things, but they have been true of the market all along.

A reasonable explanation was still missing.
IPO enthusiasm was the only possible candidate.

Then it clicked.

Simplifying the sale mechanism - the only way new shares are introduced is when a 12+ month holder sells their coins.

If 100% of the BIT holders sold their shares, no new ones would be available for purchase for 12 months.  Except on the "aftermarket", from GBTC sellers that had originally purchased from these first-sellers.

So this initial supply is limited. It is large, but it is limited.

If we assume the following:
a) COIN will eventually launch.
b) Market prices will eventually drive both COIN and $GBTC to close-to-parity with BTC market prices, with a small, constant premium.

There is one explanation for why people are willing to pay $50/share for GBTC.

The market has indicated its belief that the exhaustion of the first wave of shares, reconciled against the aftermarket seller price, will result in an equilibrium on par with market prices when BTC prices are worth no less than $500.

Said more simply, buyers believe we'll run out of shares for sale before Bitcoin valuates to $500.

I think of it like a metric from a prediction market.

A posted Bid of $50 and a posted Ask of $51.

I'll be watching how the market reacts to Maxim's presumable 'ever-renewing' Buy at 50.00.
The first few hours it led, then frontrunners got some fills, and now they sit at the top.
Bidders outbidding the leading bid shows demand outpacing supply.
Maxim holding the lead indicates a possible false floor, if sufficient new liquidity does not replace theirs.

Time and Sales for Bitcoin Investment Trust    May 08, 2015
Symbol: (GBTC)          
Time      Price   Volume   Market
14:19:58      54.50   275   OTO
14:14:03      55.00   200   OTO
14:14:00      52.00   400   OTO
14:13:48      50.00   498   OTO
14:08:36      52.00   2   OTO
14:03:01      53.00   50   OTO
13:57:13      53.00   25   OTO
13:29:09      50.00   1000   OTO
13:25:17      50.00   1000   OTO
13:18:15      53.00   10   OTO
13:08:09      50.00   1000   OTO
12:55:05      53.00   300   OTO
12:48:00      52.95   29   OTO
12:47:54      52.95   64   OTO
12:47:52      52.95   5   OTO
12:40:38      52.95   7   OTO
12:24:59      52.95   18   OTO
12:24:42      52.90   75   OTO
12:15:29      52.95   1   OTO
12:14:56      52.95   30   OTO
12:04:00      52.95   1   OTO
11:52:19      52.00   10   OTO
11:47:56      53.00   59   OTO
11:45:12      53.00   172   OTO
11:34:56      50.00   1000   OTO
11:25:02      50.00   500   OTO
11:24:00      50.00   500   OTO
11:23:10      50.00   500   OTO
11:22:38      50.00   500   OTO
11:19:47      50.00   24   OTO

We're saying the same thing, just coming at it logically from 2 different angles.
In my example and your example the numbers line up and the GBTC purchasers are paying a +100% markup at this time.
I agree they'll line up better down the road as well.

from my point of view, they will converge at $350-400 and then move pretty much together.

The question is whether bitcoin moves upwards rapidly towards GBTC (not that likely IMO) or whether they both converge which coincides with bitcoin breaking out of its downtrend.

this is not so.
$500 buys you 2.03BTC, and same $$ buy 10 GBTC= ~1BTC.
You to have tax rates in excess of 50% in order to make buying GBTC justified mathematically.
However, two prices seem to move to converge. When GBTC was $65 and bitcoin 234, it made more sense to sell GBTC and buy bitcoin.
I think that GBTC and bitcoin prices will converge at some point.

That was fast.
By the time I posted and looked at the market, NITE and CDEL put up 815 shares at 50.01.

I grabbed a few again at 53 (and so did someone else to a larger degree, looking at the trade data.
http://quotes.freerealtime.com/dl/frt/M?IM=quotes&type=Time%26Sales&SA=quotes&symbol=GBTC&qm_page=93229

I expect us to touch at least 59 again today. After that, lots of possibilities.

But seeing this Maxim strategic shift, and subsequent market reaction, on significantly increased volume in the form of new BIT sellers - I am liking it!

Hopefully were seeing the start of investors that can buy btc directly from exchanges start to do so.  And btc price will slowly rise to bit prices.

That's an interesting analysis.  Yeah they did help facilitate price discovery.  And with the currently volume, 10000 which is quite high they're still not close to getting filled.  SO they'll have to wait a bit,

Given the volume, I think Maxim did what I had pegged as the least likely scenario - changed strategies.
Betcha they just keep relisting 100 BUY at 50, but did not want to communicate the 50K ask and just get outbid while serving as the floor.

If this proves to be correct, Maxim just raised the proverbial floor.
This would be in my view the best case, the one that left those price ranges estimates at 90%. There was a chance of utter crash or floor increase.

Watching with great interest.

If and when other bidders 'get wise' to this action, the same process will repeat, with little bids front-running...and then we could have ourselves a _real_ rally and initial price peak.
Gonna have to think about whether I want to shift buy strategies based on all this or just miss out and wait...

I think Maxim realized the current market conditions and acted accordingly.
With their big buy present, 1 of 3 scenarios would play out:
-An initial fill from a holder, setting a confident floor to the price. (This failed to materialize.)
-A counteroffer in the form of a matching-size bid on the Ask side, creating price tension for the market to find the middle.
-A second+ Bid creating additional market pressure upwards. (This failed to materialize.)

Until any occurred, the order was having an effect.
With where we stood after the 3 days of price action, my sentiment became:
-I will only buy above Maxim.

I believe a large part of their initial bid was to facilitiate price discovery. In the long run, this is good for Bitcoin.

Once volume was bootstrapped, pulling the bid was the right call.
They do not need to take on the burden of being the first big bidder.
The market can move to its seeming true price, and THEN they can re-post at an appropriate price.
(Or they could shift strategies and start accumulating, but I don't think this is as likely.)

Given their pull, and the subsequent market action, I am reading it as follows:
-The market is gaining confidence that by selling today, they will not be missing out on $100/share prices tomorrow. Willingness to sell is increasing.
I am seeing the trading range of 40 to 55 as likely (75%, 90% chance IMHO we end up within 35 to 55) to be where we settle into after our first wave of higher volume, followed by lower volume. (This volume is starting to increase, starting today 5/8/15.)

Yesterday I had bids at $36.69.
I'll probably be moving that to a half-buy at just-above $40 levels for today, and reserving the second half until equilibrium seems to be reached, or bitcoin-market rally mode is confirmed.

Nice thread...i hope the ETFs will start a new era of BTC

OP could add this: https://www.google.com/finance?q=gbtc&ei=PORMVbnmOYSTswfizYCQBQ

Anyone got a better chart for gbtc? Loving the volume but overbook is almost unchanged

I can give you a use case - in retirement accounts most people can only buy official stocks. So if you expect BTC to go to $50,000, you don't care if you get it at $250 or $500, if your retirement account is such that profits are not taxed, you are still better off paying double in the long run.

From company information:

BTC/USD = $243
BIT/USD = $530

Nice markup! They say it's easier to move money once it's in the system. I'm curious if that's the case and people don't care the 110% premium or they are just un-informed investors?