Bitcoin Investment Trust (GBTC)

Grayscale allows investors to gain exposure to bitcoin through shares in the trust, which currently holds 647,540 BTC. That amounts to around 3% of the cryptocurrency’s circulating supply.

GBTC shares are derivatives of bitcoin and, in theory, should closely track the cryptocurrency’s price. So a substantial discount or premium is an opportunity for arbitrageurs – traders exploiting price discrepancies – to make money.

For example, with shares currently trading at a discount of 16% at press time, an arbitrageur expecting the price discrepancy to narrow would buy GBTC shares in the secondary market and simultaneously sell bitcoin in the spot market. The market-neutral position would yield 16% returns if shares in GBTC converge with the spot price. An arbitrageur can also hedge the long GBTC trade with a short position in the futures market, in which case, the return would be higher as futures usually trade at a premium to the spot price and converge with the spot price on expiry.

“The ability to buy GBTC and short futures and get exposure to bitcoin with about a 25% price advantage should continue to attract arbitrage, reduce volatility and narrow spreads,” Blmbrg’s McGlone said on Oct. 20, when the discount was over 20% and the six-month futures contract was drawing a premium of 4%.

Mastercard to soon offer Bitcoin rewards and purchases for merchants
The company would also allow Bitcoin wallets, credit and debit cards that earn crypto rewards to be spent. The payments giant is partnering with Bakkt, the crypto firm recently spun off by Intercontinental Exchange, as the provider of custodial services for the pilot Bitcoin service.

“We want to offer all of our partners the ability to more easily add crypto services to whatever it is they’re doing,” said Sherri Haymond, Mastercard’s executive vice president of digital partnerships, in a statement.

“Our partners, be they banks, fintechs or merchants can offer their customers the ability to buy, sell and hold cryptocurrency through an integration with the Baktt platform,” she added.

Apart from allowing users to spend, Mastercard would also allow Bitcoin wallets, credit and debit cards that earn crypto rewards to be spent, and loyalty programs where the points can be converted directly into Bitcoin.

The move comes after Mastercard has historically shunned cryptocurrencies and Bitcoin adoption for years but seems to be turning a new leaf. Visa, its key competitor in the card payments space, already offers crypto payments via its network and has previously worked with Circle to offer USDC payments on its network.

Bitcoin past $120K by January. Whenever Bitcoin makes a new all-time high, it tends to be in the early stages of a big breakout, and goes on to (at least) double over the next 3 months. History tends to repeat itself, and if it does this time around, then that means Bitcoin could double over the next three months – implying a Bitcoin price of $120,000 by late January 2021. Do we think that’s actually going to happen? Let me put it this way. A Bitcoin price of $120,000 by January 2021 is not our base case. But the fundamental, technical, and optical trends supporting the entire cryptocurrency market are so robust right now that nothing would surprise us – and it is certainly within the wheelhouse of possibilities that Bitcoin doubles over the next three months. However, would caution against getting too caught up in where Bitcoin goes over the next few months. Because the reality is that Bitcoin is going a lot, lot higher than $120,000 over the next several years.

This latest surge in Bitcoin is not like previous “Bitcoin Booms.” It’s powered by durable fundamentals. It’s powered by the fact that cryptos are now, for the first time ever, being embraced by governments, retailers, corporations, investors, and even banks.

In other words, the powers-that-be are finally starting to see cryptos as the means toward a freer, fairer, and faster future – and they’re going “all-in” with that future.

The result? Cryptos are going, and will continue to go, mainstream. At this point, it seems like an inevitability. The future is one where decentralized finance (DeFi) solutions, decentralized applications (dApps), and crypto staking are ubiquities.

And, in that future, Bitcoin is treated as the true digital version of gold – a reality which, fundamentally speaking based on the value of the gold market, implies a long-term Bitcoin price target of $500,000.

So, will Bitcoin go to $120,000 over the next three months? Maybe. History says so – but that’s not what is important, because in the long run, Bitcoin is going to $500,000.

In other words, you haven’t missed out on the Crypto Revolution just yet. We’re still in the first few innings of this ball game.

Grayscale Investments said on Tuesday that it has formally applied with the Securities and Exchange Commission to convert its Grayscale Bitcoin Trust (GBTC) into an exchange-traded fund that is pegged directly to the world's No. 1 digital asset rather than focus on creating a futures-linked ETF. GBTC's aim to convert its trust, would allow the largest bitcoin product to retain its dominance as a crypto investment vehicle, with some $33 billion in assets. However, it isn't clear that SEC Chairman Gary Gensler, who has said he prefers a futures-based ETF because it offers better investor protections, will approve a bitcoin ETF that is directly pegged to bitcoin. Futures allow investors to indirectly bet on an underlying asset. Critics say that futures-based ETFs are vulnerable to divergences in the prices of the futures and the underlying assets they track. "At Grayscale, we believe that if regulators are comfortable with ETFs that hold futures of a given asset, they should also be comfortable with ETFs that offer exposure to the spot price of that same asset," wrote Dave LaValle, global head of ETFs at Grayscale Investments, in a statement.

If you’re new to Bitcoin, heed this warning:

- Bitcoin going up is fun
- There will be price crashes
- There can be nasty crashes
- Sometimes 30% in days
- Buy what you’re ok losing
- Hold through the volatility
- Don’t try day trading
- Be patient & breathe

Grayscale states they have NOT met their investment objective yet. Here is the response from Brooke Stoddard Sales Director at Grayscale to my note regarding performance vs. bitcoin: "As noted in GBTC’s disclosure on the SEC’s website and the OTC Markets website under the headers “Disclosure” and "Company Profile” respectively, to date, the Trust has NOT met its investment objective and the Shares quoted on OTCQX have not reflected the value of Bitcoin held by the Trust, less the Trust’s expenses and other liabilities, but instead have traded at both premiums and discounts to such value, which at times have been substantial. In the event the Shares trade at a substantial premium or discount, investors who purchase Shares on OTCQX will pay substantially more or less, respectively, for their Shares than investors who purchase Shares in the private placement." Also, they did file yesterday to convert the trust to a spot ETF tracking bitcoin real time and at that time will mark to market all bitcoin positions... So during the next 75 days, hope to see the discount evaporate and the price come more to parity with bitcoin...