GBTC’s premium can act as an indicator for BTC. It is sort of a contrarian misery index. The lower the premium, the closer BTC generally is to a run.
So to be clear this is me saying, “historically this has been the case,” this is not me saying, “this is will be the case moving forward.”
I don’t have a crystal ball, I have charts and past data.
With that covered, let’s both look at the GBTC chart now…. see how that premium is almost down to the value? Dang, right? Where did that premium go!?!
Now, let’s talk about history. In the past GBTC losing or coming close to losing its premium has been a sign that BTC is about to run.
Put those two thing together, and it could be a reason to do a double take on both GBTC and BTC (all very real risks of downside aside).
In general you only get a very short period of time to buy GBTC at or around NAV. Today if you bought GBTC early you could have got it for $6.30 cents, right now BTC is trading for $6.3k… that is essentially NAV (fees and a few pips aside; see specifics on GBTC).
In sum and in short, GBTC is looking attractive today… and that might be a good sign for BTC.
TIP: Check out my last Greyscale post where I point out that ETCG is trading under NAV. If you scooped that one up you would have had a chance to sell significantly higher and you would still be up now. Please don’t take this as investment advice, instead take it as a key to understanding Greyscale products and their relation to the broader market yourself. Let’s reiterate, crypto is a bit of a war zone and you take big risks even on the best day. Further, GBTC has its own risks you should understand (see the specifics link above). All that said, if BTC runs and this premium inflates again… *!*
Understanding Risk: So let’s just quickly cover some risks with crypto trusts like GBTC so we are clear. One risk is that the price of trust will fall below the value of the trust and not recover. Another risk is that the price of the underlying asset, in this case BTC, will fall. Another risk is that your broker will stop allowing you to trade the trust (this isn’t uncommon unfortunately). Then on top of that you have all the risks of crypto in general. So is GBTC risky even at a historically attractive price? Yes, the answer is very much yes.