Great article. Bitcoin's rise in value is indeed inevitable.
The ETFs will serve a purpose for those who just want exposure to the price, but for those with the ability and true understanding of the potential of Bitcoin, better to hold your own keys for the sake of an additional 15% upside through GBTC on what we already understand will be an asset that still has '000's of % rise ahead of it.
We shy away from saying anything is inevitable. As Murray Stahl constantly says, "The crypto experiment can still go to zero." We are positioned in light of that possibility.
As far as bitcoin or GBTC, we say both have their place.
Thanks - Very informative, and a good counterbalance to "My Two Cents", 9/14 "Re-evaluating Bitcoin-Just How Risky is it?" I concluded that I was a little over-invested in BTC, and pulled back a little. But since then, BTC price has strengthened, plus you've reminded me of the halving that's coming.
Great post as usual. I took a tiny position in GBTC recently and am happy with it for all the reasons that you articulate.
One question I have for you is whether the hash rate and the difficulty adjustment are a significant factor prior to, and after the halving event occurs?
Meaning, does the miner difficulty adjusting upward tend to slow the price appreciation somewhat? Or is it irrelevant?
It should be an eventful six months for GBTC holders. Eventful is far more assured than lucrative.
While not as sudden as the halving, an increasing hashrate should cause the price of bitcoin to rise. This is because the hashrate is essentially a cost to mining.
Not buying GBTC was my biggest mistake of omission in 2023. I had time all the way to June to catch the NAV discount narrowing from 40% to 7% now, almost a 3x in 6 months... Not that I feel bad about putting that money into NRP and AMR.
Today it's probably better to buy FRMO, owned by Murray Stahl / Bregman. Stock is trading below book value, which is actually quite rare in its history. Extremely low expense %, no leverage (similar to royalty stream), and increasing but methodical approach to crypto mining and holding. I think 1/3 of book value is in TPL and GBTC.
Great article. Bitcoin's rise in value is indeed inevitable.
The ETFs will serve a purpose for those who just want exposure to the price, but for those with the ability and true understanding of the potential of Bitcoin, better to hold your own keys for the sake of an additional 15% upside through GBTC on what we already understand will be an asset that still has '000's of % rise ahead of it.
We shy away from saying anything is inevitable. As Murray Stahl constantly says, "The crypto experiment can still go to zero." We are positioned in light of that possibility.
As far as bitcoin or GBTC, we say both have their place.
Thanks - Very informative, and a good counterbalance to "My Two Cents", 9/14 "Re-evaluating Bitcoin-Just How Risky is it?" I concluded that I was a little over-invested in BTC, and pulled back a little. But since then, BTC price has strengthened, plus you've reminded me of the halving that's coming.
Thanks for chiming in, Al. Yeah, the halving is a large technical catalyst.
The ideas of arbitrage and decentralization seem to contradict each other.
If everything is visible all the time, due to blockchain's digital ledgers, arb opportunities shouldn't exist.
In the same way, if blockchain is applied to IP, scientists can't falsely claim they were the first to publish an idea about something.
Very interesting write-up! Excited for the halving...
Grayscale bitcoin trust is not decentralized at all. It’s completely centralized. It’s simply based on the decentralized asset called bitcoin.
Therefore human psychology comes into play and arbitrage opportunities always exist when there are differences of opinion on things like:
the unknown timing of conversion to ETF,
(not to mention the SEC being pressured by politicians, such as Elizabeth Warren to do everything they can to hamper crypto)
plus negativity around the management at Grayscale,
and the 2% annual fee, which is generally considered excessive.
Thanks for pointing out my fallacy, derek.
As long as there are humans making decisions, arb opportunities will exist due to irrationality & biases.
As alluded to by Derek, the arbitrage is based on a couple factors specific to GBTC and the company that owns it not bitcoin itself.
Great post as usual. I took a tiny position in GBTC recently and am happy with it for all the reasons that you articulate.
One question I have for you is whether the hash rate and the difficulty adjustment are a significant factor prior to, and after the halving event occurs?
Meaning, does the miner difficulty adjusting upward tend to slow the price appreciation somewhat? Or is it irrelevant?
It should be an eventful six months for GBTC holders. Eventful is far more assured than lucrative.
While not as sudden as the halving, an increasing hashrate should cause the price of bitcoin to rise. This is because the hashrate is essentially a cost to mining.
Not buying GBTC was my biggest mistake of omission in 2023. I had time all the way to June to catch the NAV discount narrowing from 40% to 7% now, almost a 3x in 6 months... Not that I feel bad about putting that money into NRP and AMR.
Today it's probably better to buy FRMO, owned by Murray Stahl / Bregman. Stock is trading below book value, which is actually quite rare in its history. Extremely low expense %, no leverage (similar to royalty stream), and increasing but methodical approach to crypto mining and holding. I think 1/3 of book value is in TPL and GBTC.