Win-Win Investment In Bitcoin Investment Trust GBTC This Week


  • An investment at current prices is a win-win scenario.
  • A rejection will increase the GBTC premium over NAV.
  • An approval may cause BTC price to double.

This week there is a win-win scenario through an investment in the Bitcoin Investment Trust (GBTC). GBTC is currently the only tradable security linked to Bitcoin on a public exchange. Each share of GBTC represents 0.09336483 of Bitcoin. That conversion is updated on a periodic basis. There are clearly significant risks with this investment so proceed with caution.

The big news with Bitcoin is the pending approval or rejection of the Winklevoss ETF (COIN) with a deadline on March 11th. There are also two other Bitcoin ETF's awaiting an SEC decision. The SEC has three options that ultimately decides the fate of the Winklevoss one.

1. The SEC openly rejects the Winklevoss ETF. An outright rejection would most likely result in the rejection of the other BTC ETFs. The SEC may state the various reasons for rejection. This conclusion delays the eventual creation of a BTC ETF. This is clearly the worse situation for a Bitcoin investor.

2. The SEC openly grants approval for the Winklevoss ETF. This is the best case scenario where the expectation is for BTC price to nearly double.

3. The SEC decides to do nothing. This results in an automatic approval of the ETF. In my opinion, I think the SEC pursues this option. They are not necessarily giving the ETF their imprimatur but they are allowing it to trade in the marketplace.

You might be asking yourself why an investment in GBTC is a win-win scenario considering the SEC could decide to pursue an outright rejection. An approval is a clear winner for BTC holders. However, a rejection will cause the price to fall. I predict the price to fall to around $1,100.

Historically, GBTC has maintained a large premium to the Bitcoin price since it's the only publicly traded Bitcoin investment vehicle. It's an ideal method to invest in BTC for your IRA. Historically, GBTC has traded around a 30% premium over the Bitcoin price. In anticipation of the Winklevoss ETF, that premium has drastically decreased to about 10%. If the price drops to $1,100 upon a rejection, GBTC should trade around $130 based on historical premiums. Purchasing GBTC below $130 creates a win-win scenario. Clearly, invest only the amount you can risk.

Disclosure: I am/we are long GBTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.