Synthetic Bitcoin Report – May 22

This report presents the daily trading premium to NAV and Bitcoin equivalent volume for any exchange listed investment securities that track Bitcoin. The report will analyse GBTC (the OTC Markets listing of the Bitcoin Investment Trust), and XBT ( an ETN listed on the Nasdaq OMX Nordic).

image

 

A lacklustre day for GBTC. Volume fell to 288 Bitcoin and the premium held constant at 35%.

image (1)

Volume picked up to 681 Bitcoin. The premium has remained in a -0.20% to 0.20% band the entire week.

Synthetic Bitcoin Report – May 20

This report presents the daily trading premium to NAV and Bitcoin equivalent volume for any exchange listed investment securities that track Bitcoin. The report will analyse GBTC (the OTC Markets listing of the Bitcoin Investment Trust), and XBT ( an ETN listed on the Nasdaq OMX Nordic).

image (4)

The GBTC premium is off sharply from last week. Yesterday it rose 10% to 25%. Volume has levelled off around the 500 Bitcoin mark.

image (5)

XBT’s second trading day had a respectable volume of 547 Bitcoin, which is down 50% from the listing date. The premium rose slightly to 0.20%.

GBTC Trades, And The Market Yawns

In the May 4th Crypto Trader Digest, I discounted the launching of GBTC because there had been no trades. Yesterday the first trade on GBTC occurred at a price of $42. Since each share represents 0.1 Bitcoin, that equates to a Bitcoin price of $420 or a 75% premium to the prevailing spot price at the time.

Many in the Bitcoin community were waiting for the first GBTC trade to initiate the resurgence of a bull market. However, the market digested the news and FELL. During US hours on May 4th, the price hovered around $240. Early morning May 5th, the price fell to a low of $231. GBTC while a step in the right direction for the investability of Bitcoin, has serious shortcomings that prevent it from being the catalyst that everyone wishes it to be.

As I have said previously, it is impossible to arbitrage the premium between GBTC and spot. The arbitrage mechanism is what would trigger a price rise. The buying pressure that leads to a premium over Net Asset Value (NAV) needs to find it’s way into the Bitcoin spot market. That happens when market makers, sell GBTC, buy Bitcoin, and deliver the Bitcoin to the fund manager in return for shares of GBTC. That allows the market makers to capture the premium. Even if GBTC had significant volume (only a handful of shares traded), the fund structure prohibits the creation of shares by tendering Bitcoin or cash to the fund manager within two settlement days. The creation process must happen within two settlement days to match the delivery of GBTC shares to the buyer. Then the sale by the market maker will be considered a long sell and not a short sell, which requires the trader to borrow the shares before selling on the open market. Currently it takes one year to create new GBTC shares.

GBTC will not save Bitcoin from the jaws of the bears. The premium it trades at is interesting, but not significant. If the first GBTC trade was your bull market thesis, it is time to go back to the drawing board. GBTC traded, and the market yawned.

Crypto Trader Daily – 27 March 2015

Price Action

Today was a quiet range bound trading day. The price touched a high of $255 and a low of $245. The GBTC or the first Bitcoin investment vehicle to be listed in America (on the pink sheets) went live today. It was an anti-climactic launch with no major price movements after it went live.

 

Trade Idea

Establish a short position with XBUJ15 above $250 on the hunt for a break down below $240 over the weekend.

 

In the News

Bitcoin Investment Trust goes live on the American pink sheets market (CoinDesk)

Isle Of Man clarifies Bitcoin regulations (CoinDesk)

Crypto Trader Daily – 12 March 2013

Price Action

The fade has begun. $300 couldn’t be topped today, and the price is drifting towards $290. It seems the rally has lost steam, and consolidation will occur below $290.

 

Trade Idea

Take a short position above $290 with a target price between $280-$285. Use XBUH15.

 

In the News

Cumberland Mining believed to be a winner in latest US Marshals auction (Qntra)

Bitcoin Investment Trust audited financial reports (OTC Markets)

Bter to return hacked funds (Coindesk)

Crypto Trader Daily – 3 March 2014

Price Action

Traders were in a bullish mood today after the announcement of the first publicly tradable Bitcoin investment vehicle in the US. The price climbed all the way to $281 on Bitfinex. The price subsequently corrected $10 and now stands around $270. The $300 level looms near. A slow an methodical climb through $300 could unleash an explosion of FOMO buying once breached.

Trade Ideas

Continue to buy the dips. Resist the urge to increase one’s long exposure at physiological barriers. An example would be $280, $290 … For maximum gain on the upside, consider trading XBTH15 and take advantage of the positive USD gamma.

In the News

Havelock Investments to reopen tomorrow (Reddit)

GAW Miners: Proof of Fraud (Coinbrief)

Crypto Trader Daily – 2 March 2015

Price Action

Mind the rally. The announcement that SecondMarket’s Bitcoin Investment Trust has been approved by FINRA to trade on the Pink Sheets launched the price $20 from $247 to $267. The fade has set in, and consolidation has begun around the $260 level. Expect a new trading range to form around $255-$260.

Trade Ideas

If you missed the move, don’t FOMO buy. The fade will take the price below $260 and at that point begin accumulating a long position. Use XBTH15 to play a medium term run up in price.

In the News

SecondMarket’s Bitcoin Investment Trust to list on US Pink Sheets (WSJ)

Austria might bail-in creditors in Hypo Alpe Adria bad bank (Zerohedge)

Bter plans a comeback with completely rebuilt exchange (Twitter)