Bitcoin Investment Trust (OTCMKTS:GBTC) is rebounding up 13% after Bitcoin has similarly rallied. If you are not familiar with GBTC, the Bitcoin Investment Trust is an offering by Grayscale Investments, part of Digital Currency Group, that allows retail investors to own a share of bitcoin at a premium.
One share of GBTC is equal to one-thousandth of one bitcoin. GBTC has always traded at a premium of around 10% to 30%. Now, with bitcoin rebounding after a serious bloodletting, many investors are maybe even swapping their actual coins for GBTC as a safe ramp to play bitcoin for the long haul. Of course, some of this premium comes from the fee GBTC charges as an annual fee (a 2% management fee is imposed by Grayscale LLC, who manages GBTC). Investors should understand that this is a speculative value and the boosted price at time from the desire for investors who want access to bitcoin but don’t want to deal with digital wallets or exchanges.
Bitcoin Investment Trust (OTCMKTS:GBTC) trumpets itself as a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables investors to gain exposure to the price movement of bitcoin without the challenge of buying, storing, and safekeeping bitcoins.
The BIT’s sponsor is Grayscale Investments, a wholly-owned subsidiary of Digital Currency Group.
Each BIT share represented ownership of 0.1 bitcoins initially. The trust will not generate any income and regularly sells/distributes bitcoins to pay for its ongoing expenses. Therefore, the amount of bitcoin represented by each share gradually declines over time.
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On fiat-to-crypto exchanges like Coinbase and Bitstamp, Bitcoin is yet to surpass $4,000 mark but on crypto-to-crypto trading platforms, the price of BTC hovers at around $4,100. Bitcoin faces a major resistance level in the range of $4,100 to $4,200. A breakout of the $4,150 mark could signal a full trend reversal for BTC after weeks of a downward movement. But, based on the time frame and the past performance of the asset in the last two weeks, a sudden breakout of large resistance levels remains a challenge for BTC.
Many analysts are waiting for a full reversal here and, of course, GBTC would benefit if an upward hammer does appear in a bitcoin chart.
Bitcoin Investment Trust (OTCMKTS:GBTC) has a market cap of 942.02M with 10-day volume at 3.35M. GBTC has nice volume and solid fundamentals like the rebounding coin it follows. If you are bullish on bitcoin than GBTC is looking like a good play as you are getting the lowest discount of the year – during Bitcoin’s heights, GBTC traded at $39 a share. For continuing coverage on shares of $GBTC stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next breakout pick!
Disclosure: we hold no position in $GBTC, either long or short, and we have not been compensated for this article