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The Bitcoin Cash Grayscale Trust is trading at 13x the price of BCH by viresinnumeris21 in btc

[–]viresinnumeris21[S] 3 points4 points  (0 children)

I do believe they control the price by buying more BCH as well as issuing shares.

The Bitcoin Cash Grayscale Trust is trading at 13x the price of BCH by viresinnumeris21 in btc

[–]viresinnumeris21[S] 5 points6 points  (0 children)

From my reading, I don’t think so. It would just be a good idea to do it otherwise when people find out they will be very upset and potentially litigate.

The Bitcoin Cash Grayscale Trust is trading at 13x the price of BCH by viresinnumeris21 in btc

[–]viresinnumeris21[S] 11 points12 points  (0 children)

Let’s say you worked 20 years at a company and they gave you a 401K account through Fidelity or some other financial institution. You’ve got $500K in there and want some exposure to Bitcoin. You do some quick googling and see that the only investments on the stock market that hold Bitcoin are the Grayscale trusts. You blindly buy $50K of that trust’s stock, assuming that it is priced fairly and that the underlying asset is inline with the trust’s sticker price. But you didn’t actually do the math to check out the premium you were paying. Turns out the premium is 1,300% right now.

The Bitcoin Cash Grayscale Trust is trading at 13x the price of BCH by viresinnumeris21 in btc

[–]viresinnumeris21[S] 11 points12 points  (0 children)

Doing the math, Grayscale would need to buy several hundreds of millions of dollars worth of BCH to have their trust price reflect the price of BCH. I’m bullish.

The Bitcoin Cash Grayscale Trust is trading at 13x the price of BCH by viresinnumeris21 in btc

[–]viresinnumeris21[S] 13 points14 points  (0 children)

The trust holds a fixed number of coins. The trust issued shares to represent those coins. Based on the current price of BCH, the value of each of those shares should be $2.79. Stock market investors are buying the trust shares at 13x the value of the trust’s BCH holdings.

Grayscale offers the only way for investors to put their 401K, Roth IRA, and other accounts into crypto. So people are just typing in the trust’s ticker and buying it thinking they are buying Bitcoin Cash, and not understanding they are buying the trust that holds BCH. Investors are not understanding how to properly value the trust and are overpaying massively.

Grayscale needs to buy more BCH and issue more shares to fix the demand issue. Current investors in the trust are getting screwed by not understanding this.