DO NOT BUY BITCOIN ETN’s

While the SEC messes around trying to rule on the Winklevoss Bitcoin ETF (ticker:COIN) they are ignoring the riduclous premiums in the Bitcoin ETNs. The Bitcoin Investment Trust (ticker: GBTC) from Greyscale trades in the USA and XBT which trades in Europe. XBT just broke $100 million in assets and works with XAPO for cold storage.

This is just my opinion, but:

DO NOT BUY BITCOIN ETN’s

Lets focus on GBTC for sake of argument.

Current Bitcoin prices are ~$2,514

GBTC trades at ~$388/share

GBTC has 1,868,700 shares outstanding, which they say gives each investor 0.09273259 Bitcoin per share.

1,868,700 GBTC shares outstanding * 0.09273259BTC/share = ~173,289 Bitcoins in holding

$388/share GTBC * 1,868,700 GBTC shares = market cap value: $725,055,600

$725,055,600 mkt cap/173,289 Bitcoins = ~$4,184/bitcoin

Therefore, if you buy 1 share of GBTC at 388, you are paying ~$41 for ~$23 worth of Bitcoin. Thats an absolutely absurd >150% premium. Not to mention the 2% annual fee GBTC charges.

This premium is not the GBTC’s fault. Its investors that need their heads checked. GBTC cannot reweight their Bitcoin holdings in anywhere near real time. The Winklevoss ETF, should it make it through the SEC, would reweight much more often giving investors a vehicle which more closely tracks the actual price of Bitcoin.

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