Editor's late notes: The past 24 hours has seen bitcoin in a $3,500 range from lows to high, while GBTC has seen a high of $1,900 and a low of $1,760, up from $1,672 yesterday.
Unless you have been sequestered in a nuclear bomb shelter, you are already well aware of the bitcoin phenomenom. This esoteric concept of a world measure of value, a/k/a world currency, has risen exponentially over the past few years. Only in the past few weeks has it reached into mainstream visibility. It is analogous to the dot.com frenzy of the late 1990's and while that frenzy ended badly, very badly, in its heyday fortunes were made. The same is happening today, fortunes are being made in bitcoin.
Is it too late to buy? If we learned nothing else from the dot.com boom it is that we will only know it's over in retrospect. That means bitcoin is somewhere in a spectacular upward trajectory, i.e., either at the end, the middle, or more opportunisically, the beginning. Wherever it may be on that invisible, inexplicable scale, Bitcoin Investment Trust (GBTC) remains a Special Situation trend following model in the Blue Line Classic service.
Downside: In the event of a worst-case basis, a crash to zero, we are protected by what will hopefully be a timely exit signal before bitcoin completely disintegrates. If it happens overnight, we are screwed. If it takes a few months, we give back a bit of gains and stand aside for the following slide.
Upside: The bitcoin mania has a lot further to go. Bubbles are defined most accurately in retrospect, not while in progress. After all, the stock market has been in a "bubble" since...well, my memory doesn't go back that far.
As of yesteday's close, GBTC sells at about a 40% premium to the price of bitcoin. In other words, for the convenince of buying exposure to bitcoin through your brokerage account you pay a sliding premium over NAV. That premium has been as high as 112%, to as low as a slight discount. But put that in context: Bitcoin is up 150% in the past month and over 2000% over the past year. What difference does a 40% premium make? In addition and as pointed out in previous Updates, there are periods when GBTC actually outperforms bitcoin.
In summary, bitcoin is a huge risk, but it also is a huge opportunity. My advice: Throw a few bucks at it by opening a bitcoin account (Coinbase.com) or buy into our GBTC trading system. See what happens.
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