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Screenshot Of Zero-Premium Alternative To Bitcoin Investment Trust

|Includes: Bitcoin Investment Trust (GBTC)

Summary

Screenshot evidence of Zero-Premium Alternative to GBTC.

this is primarily for linking from other posts.

xbt fill v2 gbtc alternative

GBTC’s very high premium to NAV (62% as of the close Feb. 6) has been due to the false narrative that GBTC is the only available pure-play way of gaining exposure to bitcoin in an exchange-traded vehicle. In fact, there are alternatives in Europe that trade at a near-zero premium to NAV, and these are available to U.S. investors, including IRAs, depending on the broker used.

GBTC is an ETN that has generally traded at a large premium to its underlying value of (post-split) 0.001008927 bitcoin (more info at GBTC - Bitcoin Investment Trust - Invest in Bitcoin with Grayscale As of the close Feb. 6, it traded for $12.31 per share (post the 91:1 split), compared to its underlying NAV of $7.58 per share (calculated by taking the 4 PM ET bitcoin price from bitstamp times 0.001008927 bitcoin per share). This represents a GBTC premium to underlying value of 62.4%. Buying some is somewhat like paying $162 for a $100 bill.

Historically, the premium has been due to the false narrative that GBTC is the only available pure-play way of gaining exposure to bitcoin in an exchange-traded vehicle. In fact, there are alternatives in Europe that trade at a near-zero premium to NAV. Just google “COINXBT”. Some details, including ISIN etc., for the ETN trading in Sweden can be found here:ETN Info - Nasdaq And details for the sister ETN trading in Germany can be found here:ETN Info - Nasdaq NAVs can be found here: XBT Provider

Generally both trade close to NAV (e.g., zero premium), in contrast to the 39% premium for GBTC. I have accounts at three brokerages. Fidelity allows trading of both the European bitcoin ETNs. Schwab does not. Interactive Brokers does not (although it used to). I even placed a small order, which executed, at Fidelity (not more because I am already long a basket of crypto and don’t need more and would prefer futures over an ETN anyway).

I also confirmed with Fidelity that both the Sweden-traded and the sister Stuttgart-traded ETNs can be held in IRAs. This last point is key. After bitcoin futures became available in the U.S. last month, GBTC "premium apologists" claimed that the GBTC premium was justified, as GBTC was the only way of getting pure bitcoin exposure into an IRA. That is not true.

Details at Fidelity are as follows. Taxable accounts can execute online, the Fidelity-specific symbols are BITCOIN_XBT:SE (trading in Sweden, in krona) and BITCOIN_XBTE:SE (trading in Germany, in euro). For an IRA, the trade can only be placed with a human, not online, by calling their international desk at 800-544-2976, so the commission is higher than for online trades in a taxable account. To trade the ETNs online at Fidelity, make sure your account is enabled for international trading, then hover over "Accounts & Trade" until you get the dropdown > select "Trade" > click the "International" tab > then enter one of the Fidelity-specific symbols such as "BITCOIN_XBT:SE".

I only checked with Fidelity, Schwab, and IB, so I don't know which other brokers, besides Fidelity, might offer trading in these ETNs. Perhaps if readers find others, the information could be added in comments below.

There are also sister exchange-traded Ethereum vehicles, similarly available to U.S. investors (including IRAs) via Fidelity (and possibly other brokers). You can google “Ethereum XBT” or “COINETH”. Details can be found at ETN Info ETHEREUM XBT, Ether Tracker One XBT PROVIDER, (SE0010296574) - Nasdaq (trading in Sweden in krona) and ETN Info ETHEREUM XBTE, Ether Tracker Euro XBT PROVIDER, (SE0010296582) - Nasdaq (trading in Stuttgart in euro). XBT Provider provides NAVs. Like the European bitcoin ETNs, these Ethereum ETNs trade very close to NAV, instead of the substantial premium that GBTC trades at in the U.S. vs. its underlying value in bitcoin. The availability of these to U.S. investors is another reason that GBTC's current 39% premium to NAV might come down. At Fidelity, taxable accounts can execute online, the Fidelity symbols are ETHEREUM_XBT:SE (trading in Sweden in krona) and ETHEREUM_XBTE:SE (trading in Stuttgart in euro). To trade the ETNs online at Fidelity, make sure your account is enabled for international trading, then hover over "Accounts & Trade" until you get the dropdown > select "Trade" > click the "International" tab > then enter one of the Fidelity-specific symbols such as " ETHEREUM_XBT:SE". If you need to trade in an IRA, call their international desk at 800-544-2976.

In summary, given that GBTC sells for a premium to its underlying bitcoin value of 62%, or about $4.73 per share, every 100 shares of GBTC sold at that premium and replaced with COINXBT can save the investor roughly $473 before commissions/fees. If you own, or have been considering, GBTC as a long, check with your broker…if yours doesn’t allow trading of COINXBT/ COINETH instead of GBTC, it might be worthwhile finding one who does…as long as the high GBTC premium persists, that is. Consider either transferring your account to Fidelity (or some other broker who allows the trades) or open and maintain an additional account to whatever you have now; in my opinion, saving 62% is worth it. Transferring an account in its entirety is barely more work than opening a new account. We think the premium is likely to begin compressing once this information is more broadly disseminated.

DISCLOSURE: I/we are short shares of GBTC, and long a basket of cryptocurrencies. (The hedge isn’t purely bitcoin because we believe Ethereum and certain other cryptocurrencies will outperform bitcoin.)

 

Disclosure: I am/we are short GBTC.