Grayscale Bitcoin Trust (GBTC)

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Bitcoin: Buy the Dip?
Fundstrat's Thomas Lee explains why the sell-off is a buying opportunity. Hint: Bitcoin is 'the gold investment of the millennial generation.'
By
Crystal Kim
Sept. 19, 2017 2:33 p.m. ET

Bitcoin suffered a 40% decline from its peak on September 1 to $3,226.41 last week after China, which has one of the world's largest bitcoin mines, decided to formally shut down several bitcoin exchanges. It did not help that Jamie Dimon CEO of JPMorgan Chase (JPM) called the cryptocurrency a "fraud" at a banking conference and said that he would "fire any trader that traded the digital currency."
Part of the display screen of a Robocoin ATM that accepts Bitcoin. Photo by Ethan Miller/Getty Images
Part of the display screen of a Robocoin ATM that accepts Bitcoin. Photo by Ethan Miller/Getty Images

Bitcoin bounced back above $4,000 per unit on Monday, according to Coindesk, but has been falling so far Tuesday. Bitcoin Investment Trust (GBTC) is down more than 1%, but continues to trade at a near 100% premium to its net asset value. The cost of entry might be worth it, especially if Bitcoin hits $6,000 in the near-term, according to Fundstrat's Thomas Lee.

Lee, in a report published yesterday, said China's latest move against bitcoin is a "short-term headwind," because the region only represents 20%-to-25% of worldwide trading volume, and that other exchanges will likely fill the gap that China's leave behind. He thinks bitcoin as the "gold investment of the millennial generation" will ultimately displace the yellow metal in portfolios and argues that Bitcoin could be valued at $25,000 per unit in five years if it takes just 5% share of the alternative currency market. Lee explains:

We believe this week's reversal likely defined another important trading low for Bitcoin. Why? 35-40% corrections have not been unusual for Bitcoin since 2015. September's correction is already showing evidence of reversing from important technical support defined by its rising long-term uptrend (100-dma) coinciding with price support near the June highs (3000).

Bitcoin ETN, GBTC, captures much of the upside of Bitcoin. Investors looking for exposure to bitcoin have limited liquid instruments on exchanges. GTBC, an ETN issued by Grayscale trades at a premium to NAV but if Bitcoin reaches our near-term objective of $6,000, our matrix shows GBTC captures most of the upside even at a range of NAV premium.

http://www.barrons.com/articles/bitcoin-buy-the-dip-1505846024?mod=ba-social-tw