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Bitcoin Price Forecast: Grayscale Conversion And Other Catalysts To Watch

May 03, 2022 7:00 AM ETBitcoin USD (BTC-USD), GBTCATVI, QQQ, TWTR, USDT-USD114 Comments
Logan Kane profile picture
Logan Kane


  • After challenging its all-time high in November, Bitcoin sold off and has now traded in a range between $35,000 and $47,000.
  • For those used to triple-digit percentage moves in BTC, this is peace and quiet.
  • While Bitcoin consolidates, we should look ahead to some catalysts that might break it out of its range.
  • The most important of these catalysts in my opinion is the Grayscale GBTC ETF conversion, which could allow retail investors to finally have a low-cost, liquid and safe way to invest in BTC on public stock exchanges.
Bitcoin 2022 Conference Draws Cryptocurrency Industry Professionals And Investors To Miami

Marco Bello/Getty Images News

What Is The Current Situation With Bitcoin?

Bitcoin (BTC-USD) has traded in a range for the past few months, but in the crypto world, you're never far removed from some excitement.

For one, Miami Beach hosted the Bitcoin 2022 conference in

This article was written by

Logan Kane profile picture
Author and entrepreneur. My articles typically cover macroeconomic trends, portfolio strategy, value investing, and behavioral finance. I like to profit from the biases and constraints of other investors.You can read some more of my work for free here.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of TWTR, GBTC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (114)

iowalife profile picture
I was buying BCHG & ETCG in their death spiral, now Vanguard Brokerage prohibits you from buying this OTC crap. Which is for the best.
Xxfactor profile picture
People are so easily shaken out of positions
I'm out. Sold my GBTC and ETHE at a huge loss the other day. It hurts but they are still going down even as the NASDAQ pulls up. In my opinion crypto currency is nothing more than a baseball card, the only value it has is the hope someone wants it more than you do. Also how can you be sure they won't be hacked or otherwise compromised? They also just keep inventing more, how many are there now? So much for the scarcity argument. They don't stand up to inflation, they don't preserve capital in a downturn, they are a horrendous store of value. I fell for it once but I am done. Learn from the pain of others, there are far better places to put your money.
@Brian T Learn from you? Buy high, sell low? Yes, your wisdom should be spread far and wide. You sold at the bottom of a wave 4. Genius.
Proxy profile picture
@Brian T "Learn from the pain of others... "
Your post expresses the classic pain points that likely mark the turning point of a market trend.
Finding fault with the purchase and then dumping the shares are signals savvy investors have been waiting to hear... fear followed by desperation - capitulation.
I don't know, maybe you had to cash out due to margin, or you're just impatient... you don't find 'store of value' in a 6 month time frame.

A good book to read: "The Bullish Case for Bitcoin" by Vijay Boyapati

But, if you want to be successful in investing/trading you need to pay attention to and get comfortable with cycles. BTC (which tends to influence other crypto in general) is in the mid point of it's 4-year halving cycle... we're near the point when the trend turns up into 2024.
@Brian T Well, this comment aged well.
I am going to buy a little GBTC, my first crypto purchase.
Proxy profile picture
@Whiterabbit66 emerging from the rabbit hole.
@Proxy well was :) but it seems like Vanguard will not allow trading in GBTC. Will try one of the alternatives (BITO) and hope they take that order.
@Whiterabbit66: Why not just go with a decent discount broker? Vanguard is the finest mutual fund manager, but DECADES behind as a stockbroker. (And they keep saying they're going to improve things a lot -- and then years later they've done nothing, re their brokerage service).

In my experience, TD Ameritrade is a fine balance with low fees, good service, and good technology. (I haven't traded GBTC with them, so you might want to call and ask them about that before signing up).

Allied is OK, but less reliable re the technology, especially their website / login. Also getting hold of customer service reliably. But low fees and OK with the paperwork. And they did let me trade GBTC, no problem.
Dick Cod profile picture
Your article inspired me to take a look after the more recent "stable" coin bust and continued downtrend after publication. However, when I pulled up weekly charts on GBTC and ETHE, even at their huge discounts from NAV, I was startled. It is almost impossible to imagine more awful looking charts.
Regards, Dick
bazooooka profile picture
Might do okay if you bought todays GBTC lows then but other think the bottom is closer to the cost of electricity per coin.

""Somewhere between $30,000 for BTC and $60,000+ is my guess for year-end now, with the wide range being due to how linked Bitcoin has become to other risk assets like stocks.""
if stupid low iq ppl wouldnt panic sell over fake interest and other made up gov. number to control sheep investors this wouldnt happen
@Rjm13: Yeah. Everyone (including you) should be a genius and do everything "right" (as you define it). LOL
The BTC mania reminds me of dogs eating cat crap...it is such a disgusting habit but they keep coming back for more!
Tao Jaxx profile picture
@Prison Dentist Quite an extreme image but fairly appropriate description lol
@Prison Dentist: And they will, as long as their faith in easy riches lasts -- and only that long.
HaroldRamis profile picture
Look for BTC 20k
@HaroldRamis: Look for BTC close to zero over a sufficiently long time horizon. Something like $3Kish might suffice for the next several years, but that's over 95% down from the top, so to me, that's close enough to zero for the short term wealth chasers that were piling in over $50K in droves.
Xxfactor profile picture
How is it possible that GBTC's btc holdings have "dropped significantly" like it says in the article you linked about share repurchases?

Its a trust the amount of BTC it holds should not go down besides the fee but that is constant?
@Xxfactor: I think they're talking about how the discount (which is purely based on investor supply and demand) widening considerably over time, vs. BTC.

Actually, from early 2021 back, GBTC generally had a significant PREMIUM in price compared to BTC. Then (in my opinion) the advent of the non-US ETF's, offering considerable competition to GBTC, really lowered that premium. Then, in my opinion, as visions of a rapid conversion of GBTC to a US based pure BTC ETF quickly faded by a lot, those discounts widened.

Currently, at roughly a 30% discount, the GBTC discount equals about 15 years of the 2% annual expenses GBTC charges. Whether that's appropriate, I have no idea, but it's certainly considerable. OTOH, the SEC might NEVER allow pure BTC ETF's in the US, especially if crypto becomes very unpopular in coming years (crypto winter) and there is lots of whining by lots of investors and institutions over that.

(Frankly, I think crypto is likely a long term ponzi, but think a US based WELL REGULATED ETF structure for BTC, Ether, etc. makes sense, given the COMPLETE lack of insurance, safety, regulation, etc. in the online crypto exchange industry, generally).

Here's a long term chart which looks about right (re my imperfect memory), re the GBTC premium, then discount:

Proxy profile picture
Great CNBC interview with Bitfury CEO Brian Brooks on the state of U.S. crypto regulation.


"On today’s show, Brian Brooks, CEO of Bitfury and former acting comptroller of the currency under President Trump, discusses where Congress stands on regulation of crypto in the U.S.
TUE, MAY 3 20226:00 PM EDT"
sethmcs profile picture
Gray Scale is a bunch crooks. I had a client put $5k into this crap. Did not sell any and the fund generated 55 taxable transactions. Apparently the fund to its fees in dollars every couple of days. If bitcoin was so great why don't they take their fees in bitcoin?
@sethmcs is this avoidable if the GBTC shares are held in a roth ira?
@MplsSnowball: It seems to me you shouldn't have to worry about any taxes, just like with anything else in a tax free US legal structure, like a ROTH IRA. OTOH, the 2% annual fees are real, and they WILL come out of your GBTC holdings.

Now, the other issue is I have no idea whether an IRA will LET you buy, say, GBTC and hold it. You'd need to ask your IRA custodian about such rules.

To help counter that, GBTC has a nearly 30% discount currently (about 15 years worth of such expenses), but that discount could either narrow or widen in the future, of course.

Lots of whining but little substance, re the fees. The fees are fully disclosed. They're high, but Grayscale does a lot of work and security and good auditing on its holdings (mostly cold storage BTC wallets), and there is little competition for such structures. If the SEC would approve US based pure BTC ETF's, the premium should shrink dramatically when Grayscale converts to such an ETF -- but no telling if or when that will actually occur, and NO guarantees on that -- only various predictions from supposed "experts".
Nice review, thx! Long GBTC and ETHE. I hold extra for this arbitrage besides my core holdings.
Xxfactor profile picture
@RWilliam The discount I'm both keeps getting worse
SuperAwesomeDude profile picture
Did I miss the price forecast in this article?
@SuperAwesomeDude apparently you did.
“Essentially, Grayscale is trying to get the government's permission to convert GBTC to an open-ended ETF. As of Friday's close, GBTC had a net asset value of $35.46 per share, while the market price is only $26.38. This is a significant discount to the underlying assets”

Y charts provide the informative 26% discount to nav
Logan Kane profile picture
@SuperAwesomeDude you're right I didn't put a price forecast, whoops. I think if the market is flat to up, bitcoin ATH. If it's down, I think you'll at least be flat or better in GBTC if it converts.

Somewhere between 30k BTC and 60k is my guess now.
HaroldRamis profile picture
MSTR will make you all rich
$GBTC is great and I own some, however, I like $ETHE even better in the short term as ethereum is converting from proof of work to proof of stake within the next 3-6 months. This should provide a significant boost for both ethereum and $ETHE
@B540: Or not. Or it might be delayed, again. Or crypto might well fall (it has signifiantly in the past month (June 1 today), with BTC under $30K and Etherium at $1836 as I write this.

ETHE has also not been consistently good about tracking Etherium. GBTC has been much more reliable over time, re such tracking.
Great article!
bazooooka profile picture
Short the coin and buy GBTC
DXP Investments profile picture
BITO is better than GBTC even it successfully converted to an ETF eventually
@DXP Investments lol it’s reverse. That’s whole point yes now bito slightly down less -40% vs -47% but the gbtc discount has accelerated during period with conversion this reverts. The 2% fee will be greatly reduced greyscale put all this out over a year ago.
@DXP Investments lol no its not they own 80% less bitcoin and all their bitcoin is at a terrible price while GBTC owns more bitcoin than ANY FUND ever will and never will sell any. bito is brand new low volume scam fund just taking advantage of the times
@DXP Investments: But it's NOT a pure BTC ETF. It's based on rolling futures (short term to a month to three out) and so will likely underperform BTC, like many other such funds have underperformed. Like USO vs. oil. Or TBT vs. shorting bonds. Etc.

Don't just say "it's better" without making it clear you actually know what you're talking about. You've provided no evidence you do.

It's like you're saying "apples are better than oranges". Well, they're different, but that says NOTHING about one being better, especially in all contexts.
Rational Bull profile picture
Great article Logan. Time to buy GBTC and short the miners. Obvious pair trade.
@Rational Bull if Bitcoin rallies hard the miners will outperform massively…ouch! Best stick with etfs.
Xxfactor profile picture
@Rational Bull Why would you do that? Sounds like you would break even either way?
@Rational Bull: If the miners highly correlate with BTC, as the charts seem to show, then why in the world is this true, much less obvious?
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