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Although many publications call GBTC an ETF, it's not — it's a grantor trust. It is not registered with the SEC under the Investment Company Act of 1940 and it doesn't trade on an exchange. It trades on the over-the-counter market, which has less stringent participation rules than exchanges. And unlike most ETFs, GBTC charges a high annual fee of 2% of assets.
At the Jan. 29 closing price, Bitcoin was $11,233.95. That would make the NAV for a share of GBTC (11,233.95 x 0.00100733) $11.31. However, shares of GBTC closed at $19.14, a 69% premium to the NAV. So investors would have to pay 69% more per share than the underlying asset is worth.
Grayscale recently declared a 91-for-1 stock split for the trust for shareholders of record on Jan. 22. They received 90 additional shares on Jan. 26. This lowered GBTC's share price and increased the supply adding more shares to meet demand, thus increasing liquidity.The premium of share price over NAV has fallen but is still a whopping 47%.
GBTC has plunged 66% from its Dec. 19 intraday high to trade at 13.11 Thursday. Can it rally to new highs? Perhaps, but investors should be aware of points of technical analysis before weighing in. First, GBTC has knifed below its 50-day moving average and so far has been unsuccessful in getting past that line of resistance. Also, Bitcoin and GBTC had a climax run late last year, in which prices rose rapidly after a long run-up. It can take months, even years, for securities to mount another sustained advance after a climax run.
I'm putting my toe in the water. Going to buy small amounts of crypto...
Ha that's why, all the big boys are buying it.
I only look at buying opportunities during these downturns. I do not look at what I'm "losing" because if I did that is miss out on serious long-term gains.