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Here’s Why Grayscale Bitcoin Trust Is Rising Today

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Click here for The Motley Fool's resources on Coronavirus and the market. The stock and its underlying cryptocurrency are getting a nice boost today What happened Thursday has been a strong day for cryptocurrencies. As of 3 p.m. EDT, bitcoin had risen by about 14% over the past 24-hour period, and most other major cryptocurrencies…
Here’s Why Grayscale Bitcoin Trust Is Rising Today
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Click here for The Motley Fool’s resources on Coronavirus and the market.

The stock and its underlying cryptocurrency are getting a nice boost today

Matthew Frankel, CFP

What happened

Thursday has been a strong day for cryptocurrencies. As of 3 p.m. EDT, bitcoin had risen by about 14% over the past 24-hour period, and most other major cryptocurrencies also made double-digit moves to the upside.

So, it shouldn’t come as too much of a surprise that Grayscale Bitcoin Trust (OTC:GBTC) is rising as well. Shares of the trust, which essentially holds a stockpile of bitcoin that back its share price, were nearly 15% higher on the day.

Gold coin with bitcoin symbol.

Image source: Getty Images.

So what

There isn’t much in the way of bitcoin- or cryptocurrency-specific news that appears to be propelling prices higher. Instead, this looks more like a relief rally, as bitcoin and most other cryptocurrencies have taken a nosedive along with the stock market as the COVID-19 coronavirus pandemic has spread across the globe. Even after today’s move, bitcoin is only about 5% higher over the past week and is roughly 33% lower than it was a month ago.

Now what

Before you decide to invest in Grayscale Bitcoin Trust, it’s important to point out that its shares trade at a huge premium to the value of the bitcoin owned by the trust. According to Grayscale’s website, each share represents 0.00096524 bitcoins. At the current price of just over $6,100 per bitcoin, this translates to a per-share value of $5.89, about $1 less than the trust’s current share price. Plus, Grayscale charges a high 2% annual management fee for maintaining the trust.


Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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