Dear friends, after the most recent bear market, price volatility and volume have subsided, but price has held constant. This appears to be the "doll drum" phase before the next bull cycle. In fact, I believe (based on current price action) that we have reached the tipping point, passed the 50% mark, where prices are now going to be rising (on average) at ever increasing rates instead of falling on average at ever decreasing rates until we get to another parabolic climax. Consider that there have been at least 2 prior major bull/bear cycles prior to this that have behaved in a similar fashion.
GBTC has been an excellent contrarian indicator. Since it is a closed-end fund, it generally trades at a premium to net asset value. As bitcoin rises, this premium swings wildly, sometimes in a ridiculous optimistic excess.
Shown on the chart is my version of a premium to net asset value indicator, meaning I coded it myself. It is publicly available to be applied to your charts in tradingview. Although it does not take into account the fund's net asset value decreasing at a rate of 2% per year, if we assume this is negligible, we can clearly see that premium is at lows. Every other time in the past premium as been at lows, a bitcoin price rally, and premium rally, was immediately forthcoming.
Perhaps this time it is different. And perhaps the bitcoin price will suddenly decline. However, with strong institutional interest (which should become evident after clarification of regulations which is rumored to occur in mid 2019), and frankly a lack of selling and public interest, it seems evident that strong hands are accumulating bitcoin and have been doing so in anticipation of the next moves higher.
One of the best ways to gain exposure to bitcoin (in traditional markets) is with GBTC...largely because of the huge premium appreciation which occurs as bitcoin price rises. I have, during the last bull run, had instances where premium appreciation has resulted in GBTC gains which have far outpaced bitcoin's price appreciation. Although there are now bitcoin futures products and likely bitcoin etfs in the future, not all investors have access to the futures, and the futures have a habit of trading at a premium to price when price is rising also, as well as requiring one to constantly roll from contract to contract.
Now appears to be the time to take a long-term capital gains style position in bitcoin, specifically GBTC. I plan to do this by allocating 30% of my portfolio to a position in this fund. I plan to place limit orders below the current price in a staggered fashion, with the aim of accumulating if the price of GBTC continues to fall. I plan on having a 20% stop on my final average position cost, which works out to a 7% loss on the portfolio if the stop is triggered.
We don't know exactly what price will do, but if history is any guide, given the landscape, the probabilities of an outsized gain appear (in my opinion) to be far greater than those of a loss. And that is all we can hope for when planning an investment or a trade.
I am not a financial advisor.
GBTC has been an excellent contrarian indicator. Since it is a closed-end fund, it generally trades at a premium to net asset value. As bitcoin rises, this premium swings wildly, sometimes in a ridiculous optimistic excess.
Shown on the chart is my version of a premium to net asset value indicator, meaning I coded it myself. It is publicly available to be applied to your charts in tradingview. Although it does not take into account the fund's net asset value decreasing at a rate of 2% per year, if we assume this is negligible, we can clearly see that premium is at lows. Every other time in the past premium as been at lows, a bitcoin price rally, and premium rally, was immediately forthcoming.
Perhaps this time it is different. And perhaps the bitcoin price will suddenly decline. However, with strong institutional interest (which should become evident after clarification of regulations which is rumored to occur in mid 2019), and frankly a lack of selling and public interest, it seems evident that strong hands are accumulating bitcoin and have been doing so in anticipation of the next moves higher.
One of the best ways to gain exposure to bitcoin (in traditional markets) is with GBTC...largely because of the huge premium appreciation which occurs as bitcoin price rises. I have, during the last bull run, had instances where premium appreciation has resulted in GBTC gains which have far outpaced bitcoin's price appreciation. Although there are now bitcoin futures products and likely bitcoin etfs in the future, not all investors have access to the futures, and the futures have a habit of trading at a premium to price when price is rising also, as well as requiring one to constantly roll from contract to contract.
Now appears to be the time to take a long-term capital gains style position in bitcoin, specifically GBTC. I plan to do this by allocating 30% of my portfolio to a position in this fund. I plan to place limit orders below the current price in a staggered fashion, with the aim of accumulating if the price of GBTC continues to fall. I plan on having a 20% stop on my final average position cost, which works out to a 7% loss on the portfolio if the stop is triggered.
We don't know exactly what price will do, but if history is any guide, given the landscape, the probabilities of an outsized gain appear (in my opinion) to be far greater than those of a loss. And that is all we can hope for when planning an investment or a trade.
I am not a financial advisor.