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Shares of Bitcoin Inv. Trust (GBTC) Soar to 5.5-Month High on BTC Rally

by Leon Pick
  • Shares of Bitcoin Investment Trust (OTCMKTS:GBTC) have soared to their highest level in 5 1/2 months amid bitcoin's relentless rally.
Shares of Bitcoin Inv. Trust (GBTC) Soar to 5.5-Month High on BTC Rally
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Shares of Bitcoin Investment Trust (OTCMKTS:GBTC) have soared to their highest level in 5 1/2 months amid heightened demand driven by bitcoin's relentless rally.

Bitcoin (BTC/USD) hit another 2015 high of $342 today on Bitstamp, bringing its year-to-date return to +6.9%. It has surged by nearly 20% in the last week alone, and over 50% since its lows near $220 in September.

GBTC vs BTC, Nov 2

Shares of GBTC had, up until late last week, appeared uninspired by the bitcoin rally. For the first time, shares actually traded below their implied bitcoin value for a couple of days, in stark contrast with the typical premiums of 10% to 25% seen for most of their public tenure. At one point last week, they traded at a 4.4% discount to bitcoin.

Today, they rose by 9% to a high of $37.00, reflecting a 13% premium over the average bitcoin price. Investors in GBTC may now be willing to pay more to join bitcoin's rally, which has finally achieved new 2015 milestones.

% Premium for GBTC Over BTC

The erratic behavior of the shares may also be an outcome of their limited Liquidity , leading to periodic spurts of outsized price movements in either direction. In addition, the latest legs of bitcoin's rally have become increasingly disorderly, with price spreads as high as 12.7% between major exchanges. As such, there is a larger margin of error when defining bitcoin's going market rate.

On Friday, a record 36,700 shares exchanged hands.

Each GBTC share currently represents 0.09588987 BTC, or one tenth of a bitcoin less the 2% annual management fee that has been levied on the fund since its inception two years ago.

Shares of Bitcoin Investment Trust (OTCMKTS:GBTC) have soared to their highest level in 5 1/2 months amid heightened demand driven by bitcoin's relentless rally.

Bitcoin (BTC/USD) hit another 2015 high of $342 today on Bitstamp, bringing its year-to-date return to +6.9%. It has surged by nearly 20% in the last week alone, and over 50% since its lows near $220 in September.

GBTC vs BTC, Nov 2

Shares of GBTC had, up until late last week, appeared uninspired by the bitcoin rally. For the first time, shares actually traded below their implied bitcoin value for a couple of days, in stark contrast with the typical premiums of 10% to 25% seen for most of their public tenure. At one point last week, they traded at a 4.4% discount to bitcoin.

Today, they rose by 9% to a high of $37.00, reflecting a 13% premium over the average bitcoin price. Investors in GBTC may now be willing to pay more to join bitcoin's rally, which has finally achieved new 2015 milestones.

% Premium for GBTC Over BTC

The erratic behavior of the shares may also be an outcome of their limited Liquidity , leading to periodic spurts of outsized price movements in either direction. In addition, the latest legs of bitcoin's rally have become increasingly disorderly, with price spreads as high as 12.7% between major exchanges. As such, there is a larger margin of error when defining bitcoin's going market rate.

On Friday, a record 36,700 shares exchanged hands.

Each GBTC share currently represents 0.09588987 BTC, or one tenth of a bitcoin less the 2% annual management fee that has been levied on the fund since its inception two years ago.

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