Is It Time To Buy GBTC?

The following article covers trading financial securities, such as stocks. The world of trading often comes with rises and declines of securities, and most things do not rise or fall in a straight line. By the time this article is published, circumstances involving what we mention may have changed. Often, changes in securities can be to the detriment to the traders — seldom is it beneficial. A person should only trade with money that they’re willing to lose because losses are guaranteed. By reading this post, you agree that you’ve read our disclosure.

Just a trading thought experiment, like this post on natural gas and this post on miners, but faster. I like to toy with ideas, especially if I feel a trade has more weight on one probabilistic outcome than another (like the natural gas and miner posts).

Since everyone is talking about the bitcoin ETF right now, I’ve been contemplating either outcome of it, which will either be the release of the ETF or it will fail.

  • If it fails, bitcoin will experience a correction, but the market might see GBTC as the only way to get mainstream exposure to bitcoin for the time being. This may be positive for GBTC.
  • If the ETF is approved, bitcoin may rise, which will cause GBTC to rise.

Of course, these two thought experiments assume:

  • The market sees GBTC as the only mainstream way to get exposure to bitcoin in some investment accounts. People could just buy it directly and skip the investment account route.
  • The ETF approval is bullish for bitcoin. No one can prove this; at best, it’s assumed.
  • People are completely indifferent to the idea of a bitcoin ETF in general; I am of this view in that I don’t get why bitcoin needs an ETF. I personally would see value in an ETF that’s invested in bitcoin miners, but bitcoin? That’s boring.
  • A purchase of GBTC is used as a way to capitalize on a non-taxed gain (IRA or some other tool that can get it), otherwise, direct is almost always cheaper.
  • When it comes to bitcoin, I’ve learned to leave this possibility open: [completely random event x that stuns everyone and is very negative for bitcoin and everything and everyone involved].

Just a fun thought experiment. It will be fascinating how it plays how.

Update: this resulted in a return of over 120% in less than 75 days, all tax-free in an IRA.

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