I use Grayscale's Bitcoin Trust (GBTC) and their Ethereum Trust (ETHE) for crypto exposure because I want to do it tax-advantaged and also don't want to deal with coinbase and wallets. The annual operating expense is high--2% for GBTC and 2.5% for ETHE--and a year ago both trusts were trading at a pretty high premium. But now they seem to be trading at an extreme discount:

GBTC share price = $31.94
Value of holdings per share = $40.33
Discount = 21%

ETHE Share Price = $29.52
Value of holdings per share = $33.21
Discount = 11.2%

Am I missing something here or is this a good buy if you want crypto exposure? I posted this in the crypto talk thread last week and got zero responses.

This post was edited on 1/13/22 at 12:56 pm

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Posted by Iowa Golfer

Heaven

Member since Dec 2013

10607 posts

Posted on 1/13/22 at 1:12 pm to LSUtiger17

What are your rights of redemption? I don’t recall. But you do have an arbitrage opportunity. The way I’ve done it in the past is sell against it. I do own the underlying assets however. Id need to think a second about how you could accomplish this with options. But I’d first find out what your right of redemption is.

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Posted by Zapps

Member since Feb 2021

27 posts

Posted on 1/13/22 at 1:18 pm to LSUtiger17

I see it as a good buy. I own GBTC in an IRA from an old job. Ideally, I’d rather just buy BTC and store it on my ledger from my IRA, but that’s not an option so this is the next best thing.

The 2% expense ratio is very high, but the large discount when I bought in helps ease the issue. GBTC has filed to convert to a spot ETF and we will see a large price increase to the actual price of BTC when that happens.

This post was edited on 1/13/22 at 1:22 pm

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Posted by down time

space

Member since Oct 2013

1914 posts

Posted on 1/13/22 at 11:40 pm to LSUtiger17

There are many you tube vids on the grayscale premium to nav and unlocks. The biggest thing you lose out on with ethe is the staking rewards. Im in one pool paying 50% - 200% apy. but if you don't want the risk of private keys and getting rugged maybe ethe in a roth is ok.

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