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Buy Orders in the Millions for Bitcoin Investment Trust (GBTC)

Last Updated March 4, 2021 4:44 PM
Joel Dalais
Last Updated March 4, 2021 4:44 PM

GBTC  is the listed stock for the Bitcoin Investment Trust (BIT) that many people in and outside the bitcoin sector have been eagerly waiting for. The other day it was brought to the attention of r/bitcoin  that bids for GBTC shares are starting to get a little bit more serious.

GBTC shares trade at the value of 1 GBTC share equals approximately 0.1 bitcoin, with a minimum bid of 100 shares, making the minimum bid possible ten bitcoins.

Maxim Group LLC  (MAXM), an Investment Banking, Securities and Wealth Management business, had put down a bid for 50,000 GBTC shares at the value of $35 per share. This bid equates to a buy order of 5,000 bitcoins at the value of $350, for those who are more familiar with digital currency exchange terminology.

GBTC2At the time of writing this article, the average bitcoin value is $226. The bid has brought people forward with questions of why such an offer so clearly over the average value would be made.

It could be for a variety of reasons

  • That it is easier for these investment style businesses to move money in the stock markets. The last year and a half might lead some to distrust bitcoin exchanges.
  • The last year and a half might lead some to distrust bitcoin exchanges.
  • They do not need to worry about bitcoin security as they are only holding shares.
  • There is no concern for maintenance of security.

To date there have been no sell bids placed, the speculation is that things are still being processed to allow current holders of GBTC shares to be able to sell their shares. Until then, buy orders might appear and disappear.

The bid has been removed as of today, but this does tell us that there are bids in the millions ready to be placed. And considering the relative size of the liquidity in various exchanges, an initial buy of millions in the first days of GBTC trading could be the proverbial snowball that starts the avalanche.

However, this is assuming that GBTC trading does occur within the near future. Information as to when trading will commence always seems to be “within two weeks”.

GBTC Bitcoin Investment Trust 

Bitcoin Investment Trust is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables investors to gain exposure to the price movement of bitcoin without the challenge of buying, storing, and safekeeping bitcoins. The BIT’s sponsor is Grayscale Investments, a wholly-owned subsidiary of Digital Currency Group.

Each BIT share represented ownership of 0.1 bitcoins initially. The trust will not generate any income and regularly sells/distributes bitcoins to pay for its ongoing expenses. Therefore, the amount of bitcoin represented by each share gradually declines over time.