GBTC Stock Split Explained

Posted by on January 30, 2018 in News

The Bitcoin Investment Trust (GBTC) split 91 -1. This move will make GBTC’s price better reflect the price of Bitcoin and will make GBTC more affordable for smaller investors.[1][2]

Essentially now when Bitcoin is $10k, GBTC’s Native Asset Value should be about $10.

  • Pre-split each share of GBTC represented about .092 bitcoins, so you needed 10.89 shares to own one Bitcoin worth of GBTC.
  • Post-split each share represents just under .001 bitcoin. Specifically, you’ll need 991.15 shares to own one Bitcoin worth of GBTC.

That math is easier to do and it’ll be easier to see the current GBTC premium (the difference between the Native Asset Value and the cost of GBTC on the market).

This doesn’t mean much of anything for GBTC holders. However, one should note that stock splits like this that lower the price can result in more buyers. A week ago you had to shell out about $1.7k to buy a single share, today you can buy a share for about $19 (it would have been $18, but the stock went up in price after the event).

GBTC demand is really high, but so is the premium. This premium and demand helps show us that demand for Bitcoin is high. Bitcoin may be struggling a bit on the crypto exchanges, but on stock exchanges that let their customers choose GBTC, we see a demand and price much higher than on the crypto exchanges.

BTC the crypto today trades for about $11k, GBTC trades for $19k. Does this mean the traditional investor is demanding $20k Bitcoin while the crypto investor is being more bearish? That is one way to look at it.

Article Citations
  1. Bitcoin Investment Trust Announces Stock Split. Press release Greyscale.
  2. Bitcoin Investment Trust’s Stock Split Explained, As bitcoin alternatives blossom, Bitcoin Investment Trust is splitting its stock to make its shares more accessible to smaller investors. The Fool.

Author: Thomas DeMichele

Thomas DeMichele has been working in the cryptocurrency information space since 2015 when CryptocurrencyFacts.com was created. He has contributed to MakerDAO, Alpha Bot (the number one crypto bot on Discord),...

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mike lee

So i’m trying to figure out the premium. So in a bullish market, you’re paying a higher premium when the bitcoin value goes up too right? In a bear market, you pay a lower premium when the bitcoin value goes down? or it just depends on supply and demand? How do you calculate the premium? Thanks.

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Thomas DeMicheleThe Author

The premium is literally just what traders decide to trade the trust at. There is no way to know what the premium will be (although people sure try by looking at buying and selling by bigger plays directly through grayscale and such). Really all you can do is be aware of it and analyze it.

Historically a low premium has ended meaning it was a good time to open a longer-term position (or the underlying price of the crypto is going down), and high premium meant it was getting towards the time to close a longer-term position (or the underlying price of crypto is going up). Given this, when I think we have bottomed in crypto or if we are in a bull trend and we see a historically low premium I’m typically a buyer, and when premiums go crazy and we are looking toppy on the underlying crypto, I tend to take some off the table.

Hope that helps. Feel free to ask follow up questions.

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Roberto Zambrini

” BTC the crypto today trades for about $11k, GBTC trades for $19k. Does this mean the traditional investor is demanding $20k Bitcoin while the crypto investor is being more bearish? ”

It happen because the Exchanges don’t accept new investors.

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Thomas DeMicheleThe Author

I fully agree. In other words, there is a ton of demand for crypto… but there isn’t a lot of ways to buy crypto for the average person.

Once that trend reverses I think we are going to see a resurgence in demand.

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