This Bitcoin Fund Could Plunge When Bitcoin Futures Begin Trading
Cboe Global Markets (NASDAQ: CBOE) will soon list a futures contract for bitcoin, which could be very bad news for Grayscale Investment's Bitcoin Investment Trust (NASDAQOTH: GBTC) and the people who own it.
Bitcoin Investment Trust has enjoyed a lofty premium to the market value of its bitcoin because it was the only "easy" way to speculate on the price of the digital currency. Each share of Bitcoin Investment Trust is backed by roughly 0.092 bitcoin. Based on current market prices, the trust trades for a price about 70% higher than the underlying value of its bitcoin.
The premium price is a direct result of an imbalance of supply and demand among retail traders, but it makes Bitcoin Investment Trust an unreliable way to profit on the ups and downs of bitcoin. If the premium shrinks, Bitcoin Investment Trust shares could fall in value even if bitcoin goes up in value.
Source: Fool.com
