This is what happens when the SEC delays approving a Bitcoin ETF...

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Several crypto trusts are trading at huge premiums due to there being no other options...

This is what happens when the SEC refuses to approve a bitcoin or crypto related Exchange Traded Fund...

We see related products trading at significant premiums to their underlying assets.

You likely have heard of GBTC by now, it's the Grayscale Bitcoin Investment Trust which for all intents and purposes trades very much like a bitcoin ETF.

However, it's not one.

It's trading at a premium to it's net asset value ever since it launched back in 2013.

It's currently trading at around 22% to it's NAV, which may sound high, but that is actually lower than it's historical average of close to 30% premium.

That isn't even what I am talking about right now though...

Grayscale recently launched a couple other crypto trusts, a bitcoin cash trust as well as a litecoin trust (among others).

Both of which are trading at significant premiums to their underlying assets due to the fact that there is tremendous demand for these assets but no other fully regulated way to invest in them.

These premiums would even make GBTC blush...

First up is the bitcoin cash fun.

The bitcoin cash fund is currently trading at roughly a 1,200% premium to its NAV:

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(Source: https://www.theblockcrypto.com/linked/85803/grayscale-bitcoin-cash-litecoin-premiums-assets)

The recent market price per share of the fund is $37.90, while the bitcoin cash holdings per share amount to roughly $3.19.

Specifically, that's a 1,188% premium over the price of the asset!

And that is all due to the fact that many people want exposure to the asset but don't have enough regulated options to do so.

Litecoin is even worse...

If you thought 1,200% was ridiculous, wait until you see the litecoin trust...

Currently, the litecoin investment trust is trading with a 6,000% premium.

Check it out:

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(Source: https://www.theblockcrypto.com/linked/85803/grayscale-bitcoin-cash-litecoin-premiums-assets)

The current market price per share is at $500, while the litecoin holdings per share sits at $8.37.

That's a premium of 5,974% for those doing the math!

So, what's the play here?

The play is to watch these things closely and short them when it looks like litecoin and bitcoin cash are getting toppy during this current bull cycle, but do not buy them.

When they correct, these funds are going to correct much more than the coin in the spot markets will.

Which means you can make even more money on the same move.

This has been the tendency of these products when they come out to trade at huge premiums until eventually they come down to more reasonable levels like the bitcoin and ethereum trusts have.

You can thank the SEC for this happening in the first place as it's due to there being no other good alternative options for investors.

And it's not due to lack of trying as dozens of bitcoin ETF applications have been submitted over the last couple years.

It's the SEC refusing to approve a product there is clearly overwhelming demand for.

And who do you think ends up getting fleeced by these types of market anomalies? Yep, mostly retail...

Maybe someday they will get one done and we can move past these 1,000%+ premium nonsense...

Stay informed my friends.

-Doc

Posted Using LeoFinance Beta



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5 comments
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(Edited)

Whatever i just sold a bunch of Bitcoins at 24k a piece, yes GBTC! Yeah i’m selling the premium too! Thank you BTC, and Wall Street! I'll trade the fund again, i think the premium should go!

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I sold some of my GBTC on the recent run up as well. It was hard not to take some off the table with the premium going from 7% to 27% on that runup.

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It's like a soap bubble that keeps growing until it can't grow anymore and then everyone is soaked wet and sneezing like a Pikachu in a thunderstorm...

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The SEC just needs to approve an ETF already.

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Smells similar to the stock market crash few years ago... First stock prices started going up uncontrollably and then shit did hit the fan...

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