A Discounted Opportunity on Bitcoin’s Milestone Moment
Bitcoin is back!
Over the past month, the price of the world’s largest digital currency has surged more than 28%.
And now Bitcoin is within striking distance of those $64,000 highs set back in April.
Plus, the cryptocurrency is well on its way to my updated price target of $75,000 by the year’s end.
So does this rally have legs?
Well, we’re on the cusp of one of the most important moments in the history of crypto. The market reaction should create sparks.
But we’re also seeing some intriguing areas of value.
A Victory for Investors
I’ve argued that cryptocurrencies – especially Bitcoin – can no longer be fringe investments. They’re mainstream.
And “bubbilicious” comparisons, such as with the Dutch tulip mania of the 1630s, stem from an outdated mode of thinking.
I find it hard to continually call this asset’s death spiral when it’s been with us for more than a decade at this point. And Bitcoin was launched in 2009, which makes it older than the legalization of adult-use cannabis.
Cryptocurrencies have shown that they’re prone to cycles, just like every sector. And a lot of the crypto sector’s ups and downs are centered around real-world events.
Well, we’re now at the precipice of one of the biggest catalysts in crypto’s history.
This week, the ProShares Bitcoin Strategy ETF (NYSE: BITO) begins trading.
This is a milestone moment that U.S. investors have hungrily been waiting for. There’s been a push for the Securities and Exchange Commission (SEC) to approve such a fund for years.
Now, the SEC still hasn’t given the thumbs-up to the ProShares Bitcoin Strategy ETF.
But the market policing agency hasn’t stepped in or stood in the way of this debut. And that in itself is a huge win for the crypto sector.
This is likely merely the tip of the spear, as companies such as Invesco (NYSE: IVZ), Valkyrie and others have applied to launch their own crypto products.
That means there are plenty of reasons for crypto investors to celebrate.
At the same time, there’s an “old dog” Bitcoin trade that is experiencing a fascinating price inversion to the digital currency…
But does that make it a “Buy”?
Where Has All the Premium Gone?
Originally launched in 2013, the Grayscale Bitcoin Trust (OTC: GBTC) is the world’s largest fund that holds Bitcoin. It has $39.8 billion under management.
Each share represents 0.000935 Bitcoin. And it currently holds more than 3% of all Bitcoin available.
For years, it’s been one of my favorite trades – along with crypto miners Marathon Digital (Nasdaq: MARA) and Riot Blockchain (Nasdaq: RIOT) – for “regular” investors to gain access to digital currencies.
The Grayscale Bitcoin Trust can be bought in a traditional trading account or IRA. So investors don’t need to open a separate digital wallet to own shares.
And shares of the trust have rocketed more than 400% over the past year. Not to mention that they’ve skyrocketed 40,928% since inception!
The Grayscale Bitcoin Trust means that investors without digital wallets have access to the explosive potential of cryptocurrencies.
Now, for this ease of access, the trust historically traded at a premium to Bitcoin. And the premium was actually quite steep. But since March of this year, there’s been a significant inversion.
The Grayscale Bitcoin Trust is now trading at a discount of more than 20% to Bitcoin’s price.
This is uncharted territory.
The launch of the ProShares Bitcoin Strategy ETF appears to have created some headwinds for Grayscale.
And now not only is the trust trading at a discount to the cryptocurrency’s price, but it’s trading at a discount to net assets by almost 20% as well.
For investors who sat on the sidelines and watched Bitcoin and other cryptocurrencies roar higher, the current discounts from the Grayscale trust offer an intriguing opportunity.
It may be a great undervalued way to snag a piece of the potential upside in crypto’s milestone moment. And it can all be done easily in an IRA.
Here’s to high returns,