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GBTC Premium at 825am PST = 5.33% (Patreon)

Published:
2021-02-02 16:35:50
Imported:
2022-03

Content

A common Q.  According to data from on-chain analytics resource CryptoQuant, the price premium of the Grayscale Bitcoin Trust (GBTC) just hit its lowest since April 2019.

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Comments

Anonymous

I think it is likely to stay down due to Skybridge Capital offering a fund with a lower fee: 75bp. Skybridge has a $50 minimum so GBTC stays relevant for now.

InvestAnswers
>>52754426

Good point David. But there's lots of people all over the world that want to get in fast and sky bridge is a special subscription that requires a minimum of $50,000 investment (What this means is you need to be an accredited investor and go through a lot of paperwork which nobody has the time for these days especially when bitcoin is beginning to move fast again). For people that don't have access to coin base or kraken and want to just get on the bitcoin train it's a simple and easy way. In full disclosure I have over 5000 GBTC in a retirement account. That is not all my BTC holdings - just a small part. Remember my Pennywise pound foolish thing - don't worry about 5% premium when BTC goes up 5-10% a day. Just my opinion.

Anonymous

Super Appreciated!

Anonymous

It's been pretty low since the Jan 27 low. When BTC moves down substantially over the weekend, GBTC sometimes will gap and sell-off excessively. I've been using this to increase my IRA position over the past months. Being mindful of the premium is important as it can get silly at times.

Anonymous

What about Grayscale ETHE? Price movement at times seems quite detached from the real Ethereum. Some times it rises quicker but for the past couple of months it seems to lag behind. It may present some arbitrage opportunities?

Anonymous

Yes, I have been watching this and trying to only buy under a 6% premium. According to CryptoQuant the low was actually 2.148% on 1/26/21, but it did not stick around for long :-) I agree with David, as new vehicles come in with more reasonable fees, GBTC should see its premium drop. In the long run it should trade at a slight discount given the massive, unjustified 2% fee. I have been calculating the premium myself (not sure why) and you can just watch the BTC/sh slide down day by day. I assume they are taking their pound of flesh every day. Except for IRAs I buy some GBTC planning on a increase in premium post Saylor conference. Hopefully I will stay alert and swap it to BTC while the premium is high and not just sleep on it until the premium is below my breakeven :-)

InvestAnswers
>>52756633

Precisely premiums will drop and ultimately go to close to zero overtime. I mentioned this in previous videos as well but again though is if in doubt zoom out think big picture think about the cost of waiting to buy bitcoin in October when within 92 days it went from 10,000 to 42,000. Speed is the name of this game.

Anonymous

Question: Could you please explain why would anybody buy GBTC when MSTR tracks bitcoin price without the premium?

Anonymous
>>52758530

Without the premium? If we look at the total market cap of MSTR and the # of bitcoins they have, the premium is like 100% per bitcoin. There's a software business sure but if it's a pure BTC play, the premium is even higher isn't it? Or am I wrong? Thanks!

Anonymous

MSTR was a wonderful play earlier, the question is what about now. A few minutes ago the premium on GBTC was 6.8%. MSTR held BTC worth $291/sh but it was trading at $794. That massive delta of $503 is a combination of the base business' value and a premium on the BTC holdings. Looking back a year the think at most you could value (back of the envelope) the business at $250/sh so you are paying at least $253/sh premium for the BTC -- that is ~ 87%!!! I hold a small amount of MSTR and will continue to do so as long is it stays in the premium bubble, when the bubble shrinks I will probably sell the position and possibly even go short if the looks like the implied premium will shrink faster than BTC will rise.

InvestAnswers
>>52985744

My one year target for Microstrategy in my very first video before bitcoin even moved in December was $1150. That has changed. We are nearly at $900 as we speak. It's been a crazy rise and I think people are FOMOing into the stock because of the MSTR Conference and because Michael Saylor is everywhere and people call him Bitcoin Jesus - so it's done great things for his brand and his company's brand and maybe that is why. I still hold my position shorting the $290 puts and holding the $300 calls at a net cost of $200 a contract for 10 contracts ($2000) and it still makes me $30,000+ a day.

Anonymous

That's awesome position how do you find that expensive short put prices?

InvestAnswers
>>53099894

I use a model to analyze what I believe the price should be versus what the market quotes. It is time intensive but worth it.