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GBTC Drifts Toward Fair Value as Hype Subsides

by Leon Pick
  • Shares of Bitcoin Investment Trust (BIT), traded as GBTC on the OTC markets, have drifted back toward their fair value.
GBTC Drifts Toward Fair Value as Hype Subsides
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Shares of Bitcoin Investment Trust (BIT), traded as GBTC on the OTC markets, have drifted back toward their fair value as the hype surrounding their initial offering begins to wear off.

Shares in GBTC, approved for trade last quarter, debuted two weeks ago as the first regulated Exchange -traded vehicle for the public to gain exposure to bitcoin prices. Each share in the trust represents 0.1 bitcoins, implying a fair value of roughly $24 apiece based on the current bitcoin price.

Early investors were more than willing to pay a heavy premium to get their hands on the first shares. Share prices hovered near $50 for most of the two-week period, representing a 100% premium. Some reports suggested even higher premiums based on OTC "outlier data". Some investors see bitcoin prices soaring multifold in the future and therefore, argue that prices of the regulated shares are technically "cheap".

However, GBTC prices have since given back 24% to match their lowest levels since launch, falling to $38.00 in the final minutes of trade on Friday. While still a 58% premium, the initial hype maybe wearing off, especially as a greater diversity of investors begin to participate.

Shares of Bitcoin Investment Trust (BIT), traded as GBTC on the OTC markets, have drifted back toward their fair value as the hype surrounding their initial offering begins to wear off.

Shares in GBTC, approved for trade last quarter, debuted two weeks ago as the first regulated Exchange -traded vehicle for the public to gain exposure to bitcoin prices. Each share in the trust represents 0.1 bitcoins, implying a fair value of roughly $24 apiece based on the current bitcoin price.

Early investors were more than willing to pay a heavy premium to get their hands on the first shares. Share prices hovered near $50 for most of the two-week period, representing a 100% premium. Some reports suggested even higher premiums based on OTC "outlier data". Some investors see bitcoin prices soaring multifold in the future and therefore, argue that prices of the regulated shares are technically "cheap".

However, GBTC prices have since given back 24% to match their lowest levels since launch, falling to $38.00 in the final minutes of trade on Friday. While still a 58% premium, the initial hype maybe wearing off, especially as a greater diversity of investors begin to participate.

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