Infamous Wall Street Shorter Creates GBTC Entry Point Opportunity As GBTC Craters During Bitcoin Price Spike


from Seeking Alpha

This morning, the GBTC investment trust saw its premium crater due to a large seller.

Bitcoin is currently in an uptrend with the potential to break $5,000 – if it does, the premium for GBTC will likely follow it.

Possible short term trading opportunity available for traditional investors.

The Grayscale Bitcoin Investment Trust (OTCQX:GBTC) has had a significant premium to Bitcoin this year thus far due to high demand and limited shares. That premium has been increasing rapidly in the last few weeks, at one point going as high as 130{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. Recall each share of the fund is backed by 0.09242821 BTC, so take the fund value and divide it by this number to arrive at the value being given to Bitcoin by investors in the fund. At the time of writing this, the value given to each Bitcoin in the fund is $9,665.65 while the price on CoinMarketCap is $4,814.14. Hence the premium at time of writing is approximately 101{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}. This is a sharp dive down from the premium just the day before due to a large investor selling off his shares at open, as can be seen below:

The chart below illustrates the premium to NAV at close over the last 6 months:

From this chart, it appears that GBTC was far overextended and this is a correction to revert the premium to around 75 – 85{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} that we’ve been seeing throughout July & August. Earlier this morning, the premium fell to that range. Now the premium is back over 100{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, but price action suggest that we may see several dips down to around 80 – 90{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} premium range. I would buy around 85 – 90{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} premium, which works out (at the time of writing) to be around $825 – 850. The primary reason behind why I would buy at a higher range than where it’s been trading since July is because there is a divergence right now between the direction of Bitcoin and the direction of the premium. Take a look at price action in Bitcoin over the last 12 hours: