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GBTC Shares Shed 28.5%, Approaching Fair Value

by Leon Pick
  • Shares in Bitcoin Investment Trust (BIT) have continued their slide back toward fair value.
GBTC Shares Shed 28.5%, Approaching Fair Value
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Shares in Bitcoin Investment Trust (BIT), which debuted for public trade as GBTC just over two weeks ago, have continued their slide back toward fair value.

Yesterday's plunge saw them shed 28.5% to $27.15, their lowest value ever. It took just a few days for the shares, each representing one-tenth of a bitcoin, to come within 16.5% of fair value. Bitcoin prices are currently near $233. Shares had been trading as high as $50.00, with unofficial trades reportedly reaching $133.70 - a 457% premium at the time.

As the secondary market clientele continues to diversify and make the market more efficient, it is possible that shares will continue to gravitate toward the $23 mark. Taking into account the fund's 2% annual fee, traders may find value equilibrium near $22.50.

The behavior reinforces the theory that passionate and/or well-capitalized Bitcoin investors were behind much of the buying following launch. In espousing Bitcoin's long-term potential, they were more than willing to pay a premium for shares, and may have also offered or paid above market rates in the US Marshals bitcoin auctions.

Shares in Bitcoin Investment Trust (BIT), which debuted for public trade as GBTC just over two weeks ago, have continued their slide back toward fair value.

Yesterday's plunge saw them shed 28.5% to $27.15, their lowest value ever. It took just a few days for the shares, each representing one-tenth of a bitcoin, to come within 16.5% of fair value. Bitcoin prices are currently near $233. Shares had been trading as high as $50.00, with unofficial trades reportedly reaching $133.70 - a 457% premium at the time.

As the secondary market clientele continues to diversify and make the market more efficient, it is possible that shares will continue to gravitate toward the $23 mark. Taking into account the fund's 2% annual fee, traders may find value equilibrium near $22.50.

The behavior reinforces the theory that passionate and/or well-capitalized Bitcoin investors were behind much of the buying following launch. In espousing Bitcoin's long-term potential, they were more than willing to pay a premium for shares, and may have also offered or paid above market rates in the US Marshals bitcoin auctions.

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