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RE: Your Daily Crypto News on Steemit August 16, 2017
Danyelk, thank you for the article. On the topic of ETF's, there is currently a OTC stock Bitcoin Investment Trust (GBTC) as you are likely well aware. My understanding from research is it trades to a premium to the underlying value of the currencies it holds, I wonder why that is. I bypassed that option of paying a premium and just set up a Coinbase account instead. I wonder how this EFT will be valued, and if it would impact the price of GBTC. I will follow you in case you end up reporting on the topic more!
Hi that is a good question. I really don't know what I could find is this: The Grayscale Bitcoin Investment Trust (OTCQX:GBTC) exclusively holds Bitcoin. GBTC shares represent bit less than 1/10 of a Bitcoin (0.09320637 BTC / share according to the last quarterly report). A annual 2% fee is paid to the sponsor of the trust, which erodes share value. The GBTC Bitcoins are held by a custodian (Xapo), so GBTC shares. The value of GBTC shared implicitly depends on the security of Xapo's IT systems and handling of the trust's Bitcoins.
The latest quarterly report discusses a risk that Xapo has not been able to insure its Bitcoin holdings. Since the monetary value of holdings is substantial, and Xapo serves other customers in addition to the trust, Xapo may targeted by sophisticated cybercriminals, insiders, or other threats. Without insurance, this could wipe out the value of GBTC shares.
While the 2% fee and custodian risk should logically lead GBTC shares to be less desirable than buying actual Bitcoins, this does not seem to be the case (yet), with GBTC substantially outperforming underlying Bitcoin prices recently. If you find out more please let me know thanks.
Thank you for that insight. One other thing I thought of is if GBTC received the Bitcoin Cash in the hardfork and that lifted some of the value underlying itt stock. However, I believe Coinbase has insurance contract on Cryto holdings for a company-breach, so I would much rather pay them the 4% credit card fee to get the appropriately priced BTC, than the huge premium to GBTC.
Yes 4% is not that much to be on the save side. You write some good info in your comments if you do some posts the same way you will get some good upvotes keep it up and steem on buddy.
Thanks, you are welcome to follow me as I will have some articles coming over the next week.
Okay done follow you and looking forward to see some nice posts from you.