GBTC is a Bitcoin Investment Trust run by Grayscale Investments. Investing in the trust is intended to be the same as investing in bitcoin. It would appear that investing in the trust this morning would have been a really smart thing to do. After all, the price of GBTC went from $309 to $384 today! That's a return of 24%!
How did Bitcoin do today between the hours of 9:30am EST to 4pm EST, which is the time you could have traded GBTC since it's on an American exchange. According to GDAX, the price of bitcoin was about $2,330 at 9:30am EST and about $2,330 at 4pm EST. That's exactly the same price.
How the hell can GBTC go up 24% when bitcoin opened and closed at the same price!!
My guess is that the people buying GBTC don't have a clue about what it is. I don't blame them, because the information isn't available on the obvious website where you would expect it to be.
If you google GBTC, the first two results are Yahoo Finance and Marketwatch.
Yahoo Finance does not provide any info on what GBTC actually represents. There is a "Profile" tab, I have never been able to get that to load for GBTC.
Marketwatch, the second Google result, shows much more than Yahoo Finance. Unfortunately, the MarketWatch info is fake news. GBTC doesn't have a price to book of 1.34, does not have a PE ratio of 7.55, etc. Looks like their system is picking info for a stock...not sure what that info corresponds to, but it's not for GBTC.
SeekingAlpha is another top result with the same lack of information.
OTCMarkets.com and Grayscale.co, which are down at the bottom of the search show the real story.
If you scroll to the bottom of the GBTC page on Grayscale's website, you see that each share of GBTC represents 0.09289534 bitcoin. Based on the 4pm EST price of bitcoin, each share of GBTC was worth $216. GBTC closed at $384. That means buyers were willing to pay a 78% premium for each share!
Historically, the premium buyers were willing to pay for GBTC over the actual price of Bitcoin was roughly 5%. That changed around the 3rd week of May, when it spiked to above 100%. It was down to about 55% until it went up to 78% today.
Who is buying GBTC?
I wish I knew, because I would sell them bitcoin for only 50% premium, maybe even 45% if they want to negotiate. Great deal for both of us! GBTC is sold on OTC (Over the counter markets), which means there is no central exchange like there is for normal stocks. Searching online, the only big names I saw that offered OTC trading in the US was Scottrade and Fidelity. I haven't confirmed if Scottrade specifically allows you to purchase GBTC, but I do know that Fidelity does.Why do I care?
Full disclosure, my 401k is through Fidelity, who recently become very pro bitcoin and pro crypto currency. As of less than a month ago, Fidelity allows trading of GBTC. I would love to buy GBTC to diversify my retirement portfolio. If the premium ever calms down to below 20%, I am ready to BUY BUY BUY!Sadly, I don't think it will anytime soon. GBTC is the only game in town right now. It doesn't look like a Bitcoin ETF will be approved anytime soon, so I may be waiting until other OTC Crypto Funds pop up.