Wanna know what’s working? The bitcoin trust! Here’s the latest on $GBTC (January 04, 2021)
GBTC GXBT GBTC
I want to look at Bitcoin ( OTCMKTS: GBTC ). I really started focusing on this even in this Chart of the Day format back in October when this broke out, basically right there, right above $15.00. You can see it really completed; it’s been a pretty wild base but it really did complete a base rebounding off the 200-day moving average and moving higher.
Now, you should know what this is, if you are buying it you need to know what you are buying. It’s not a stock, it’s a trust. It’s not an ETF; Grayscale ( OTCMKTS: GBTC ) buys bitcoin but they are basically selling shares at like a 30 percent premium. If you are a rich dude who can actually get into the fund, you give them cash or you give them bitcoin and in return, they give you shares of GBTC ( OTCMKTS: GBTC ) and the shares that they are giving you, they are giving you shares on par with bitcoin but the market value of those shares is a 30 percent premium.
I didn’t explain it exactly right, but guess what? It’s a free video, figure it out. The bottom line is, this is a horrible way for you just to be investing in bitcoin, at least on paper; because you are buying crap at a 30 percent premium, and who the heck wants to do that? This is what I would say to that; I am totally happy buying something at a 30 percent premium as long as I can sell it also at a 30 percent premium. It’s kind of like the epitome of buy high sell higher.
What I am not going to be happy about is if I buy something for a 30 percent premium and then the bottom drops out and suddenly there is no premium left in the vehicle and now I am up a creek. I don’t really see that happening with Bitcoin ( OTCMKTS: GBTC ) but what we are seeing here is, this stock has just kind of continued to go up. It doesn’t trade in perfect sync with Bitcoin ( OTCMKTS: GBTC ) itself with the cryptocurrency. It doesn’t do that but generally speaking they kind of rhyme.
Here’s the Bitcoin ( GBTC ) trade price, they work pretty well together. And I still think, I had mentioned it before when it was at 15.00, I said, “Hey, it could go to 20.00”. When I saw it broke through 20.00 I said, “Hey, I think it can go to 30.00”, so now here we are and I will say it,” I think it can go to 40.00”. And what’s going to happen when it gets to 40.00, and it will? I will probably tell you I think it can go to 50.00. And the operative term there is think, because then if it doesn’t do that you can’t turn around and say, Fitzpatrick, you were wrong; I will say, I didn’t say it would absolutely go, I just said I think it’s going to go, and I do, I think it will.
This is literally my biggest position in the stock market right now and it’s not really technically even a stock. Frankly, it’s about the only thing that seems to be working right now. But keep in mind you have always got to look for the opposite side of the trade. When you are looking at something and are saying, well, I think it’s going to go to 20.00, I think it’s going to go to 30.00, I think it’s going to go to 40.00. Guess what you’re doing? You are building in complacency, you are getting complacent and saying, I’ve got a sure thing, and I’m so smart for doing this, and I am going to make all this money, and you start counting your money. Like how much money are you going to make in your position if it goes to 40.00, and then if it goes to 50.00? And pretty soon you are shopping for a Lamborghini here. Don’t do that.
Always know that you have got to trade risk first. Always look and say, if I am in this trade what’s the maximum amount of money that I can risk? What’s the maximum amount of money that I am willing to lose? That’s where you start. After you have factored in the loss; after you have factored in the risk, then you can go for the big bucks. But until that time I do not give you permission to look for any kind of reward. You look for the risk first, okay?
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