Our team expects a much higher Bitcoin price in This idea was discussed in more depth with members of my private investing community, Crypto Waves. There has been a lot of pent-up demand for and excitement about a Bitcoin ETF since the heady days of That day finally arrived.
The assumption was that an ETF would attract funds parked on the sidelines into the cryptocurrency asset class because it eases some of the regulatory issues and user experience challenges of trading Bitcoin spot.
Finally the day arrives, four years later than the market expected, but Bitcoin prices have dropped ever since. If you are an investor uninterested in using crypto exchanges but desiring crypto exposure in your stock account, should you add BITO to your portfolio? It does not hold actual Bitcoin. Rather, it holds Bitcoin futures contracts, which trade on the Chicago Mercantile Exchange.
While this does mean that the fund loosely tracks Bitcoin prices, it is affected by what is called roll decay.
Bitcoin futures trade in contango, which means next month is priced higher than the front month. Each time the fund rolls futures contracts near expiration, it sells a cheaper contract to buy one that is more expensive.
How does the Grayscale Bitcoin Trust Work? Shares in the fund can trade at either a premium or a discount to the actual price of Bitcoin.
That process of rolling drags on or decays the NAV of the fund, resulting in its slight underperformance versus spot Bitcoin. In reality, roll decay will fluctuate as the spread between futures contracts fluctuates. We can look at BITO's first four months of trading. BITO vs. Bitcoin, indexed to Tradingview Given the heavy drag of roll decay, I want to consider strategies for capturing Bitcoin's return in standard stock brokerage accounts.
But first, let me recap on our team's perspective for Bitcoin in the coming months. This level was achieved. However, the extension from late to early was larger than predicted by the Elliott Wave Theory and Fibonacci Pinball.
What Is the Grayscale Bitcoin Trust?
The market has chosen to frustrate us a bit by remaining in corrective mode for almost a year now, after being rejected at its first attempt at a breakout in November of But honestly, this correction is a very standard wave four flat. Wave fours are often extraordinarily choppy and range-bound. However, the structure is corrective off the lows, leaving some uncertainty about whether the low will hold.
You'll notice that I have added the blue triangle to my chart. If we have bottomed, the C wave was shorter than usual, compared to the A wave. This often indicates that a triangle is in play.
Regardless of whether the ultimate end to this wave four has been seen, a reversal appears to be in process, and so scaling into Bitcoin or assets with Bitcoin underlying is a reasonable strategy. The question, again, is what you should do with your stock portfolio. You have some options. Should you use Grayscale? The issue with this preference is that discount continues to grow.
But you can call me a sucker for an asset on sale. Part of me prefers GBTC because there is a slim chance of catching that instant move to par.
That said, I am honest with myself. I find that position illogical, since the futures prices are based on a reference index price derived from exchange prices.
In my heart of hearts I hope the SEC will realize its folly. Of course, my hopes for bureaucratic repentance are probably in vain. So what should investors do?
The Third 'Option' My answer to this dilemma is a third strategy.
A carefully executed BITO option selling plan can counter the underperformance of the fund. A BITO option plan might sell put options in order to get paid to enter the shares.
And one might sell call options out of the money to obtain income, in order to claw back some of the underperformance versus spot.
GBTC: Everything You Need To Know About The Grayscale Bitcoin Trust
But be warned. I've only just started to deploy this strategy in my portfolio and have not fully systematized it. I'll discuss my experience so far. Let's look at the put side of the trade.
What Is the Grayscale Bitcoin Trust?
Therefore, the premium harvest numbers discussed are conservative. The opportunity cost of losing your ce este un robot binar profitably but before the ultimate top in the market is one risk of using this strategy.
Bitcoin-based options have a unique characteristic compared to other options. In stock index options, implied volatility tends to swell as prices drop and fear sets in.
In many commodity options, including metals, option implied volatility increases during strong rallies as FOMO sets in. However, Bitcoin-related options tend to be bi-directional. Implied volatility, particularly in calls, tends to rise when Bitcoin rallies. Implied volatility, particularly in puts, also tends to rise when Bitcoin prices are shrinking.
Oct 28, Let's address the immediate reaction of probably many readers when they first read this headline.
If you factor implied volatility into your premium harvesting, investiție bitcoin către (usa-otc-pk gbtc) can improve results.
And, to a degree, inflated implied volatility can be used to indicate the risk of the market turning.
BITO is a faulty product that decays as the fund managers have to roll Bitcoin futures in contango. GBTC, on the other hand, has a high expense ratio with an unpredictable fluctuation in discount and premium.
BITO vs. GBTC: What's The Best Buy In The Crypto World Right Now?
However, for those investors with some experience of options, or the willingness to learn, BITO options provide an opportunity to take back some of the underperformance, hard-coded into the investiție bitcoin către (usa-otc-pk gbtc) structure.
Editor's Note: This article discusses one or more securities that do not trade on a major U. Please be aware of the risks associated with these stocks. Join Crypto Waves!
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