Grayscale Bitcoin Trust (GBTC)

[oiledgearz]

Here's another of the erstwhile lucrative trades, now impossible to do without a large premium... and this was virtually risk free:

E.g. - GBTC NAV is 20 and is trading at a 25% premium (25).

Accredited Investor buys 10,000 shares GBTC stock at NAV from GBTC, which is restricted for a holding period of 6months.

Investor immediately shorts 10,000 shares GBTC at 25, locking in a gross profit of $50,000

Investor had to go to his broker to get the shares to short, the broker charges him a small percentage for the 6 months term, because the broker knows those 10,000 restricted shares are already there for replacement, like shorting against the box.

An accredited investor can also give bitcoins they own (not borrowed bitcoins) to GBTC in exchange for restricted shares valued at NAV, with the bitcoins delivered valued at whatever it's trading at that day, i.e., for the above trade, pay with bitcoin in lieu of cash.

At 6 months, broker now has the unrestricted shares to be returned. And of course, it does not matter what the price of GBTC is, could be 10 or 1000... the investor shorted 10,000, has returned 10,000.

This went on for quite some time and in large numbers... why not, it was essentially risk free!