Bitcoin Investment Trust Andrew Left Citron Research

Citron Research’s Andrew Left Warns Investors to Avoid the Bitcoin Investment Trust (OTCQX: GBTC)

Famed short seller Andrew Left of Citron Research is making another major call that should have Bitcoin investors listening. Mr. Left has made a name for himself over his vast career as a short seller, which includes his latest proxy battles with Valeant Pharmaceuticals International, Inc. (NYSE: VRX), Wayfair, Inc. (NYSE: W), NVIDIA Corporation (NASDAQ: NVDA), Exact Sciences Corporation (NASDAQ: EXAS), and more. As of September 1, 2017, Mr. Left has set his sights on a new target: Grayscale Investments’ Bitcoin Investment Trust (OTCQX: GBTC).

Andrew Left, Source: CNBC

Andrew Left, Source: CNBC

Unlike his past targets, the Bitcoin Investment Trust is not actually a company, but rather an investment fund that is supposed to closely track the underlying trading action in Bitcoin prices. Mr. Left makes it clear that he is not specifically targeting cryptocurrencies as a whole, but rather the specific investment fund that has continued to garner lots of attention this year.

In the latest Citron Research report on the Grayscale Investments Bitcoin fund, Mr. Left and associates make the case to investors and regulators that the Bitcoin Investment Trust is a massive bubble waiting to wreak havoc on unsuspecting investors.

Here is the problem: the Bitcoin Investment Trust is trading at a massive premium to underlying Bitcoin performance. To be specific, underlying Bitcoin prices have surged around 400% in 2017, while the Bitcoin Investment Trust has skyrocketed over 726%. With its current market cap around $1.8 billion, the Bitcoin fund is worth twice the value of actual Bitcoin. This massive premium is putting investors at considerable risk. Even Mr. Left calls the Bitcoin fund the “most dangerous way to play Bitcoin.”

Citron Research Twitter

Citron Research Twitter

Earlier this past week, the Bitcoin Investment Trust traded above $1,000 per share for the first time. However, as of September 2, 2017, the fund has a share price of $800. However, Citron Research says the fund should be trading no higher than $550 a share, based on its underlying total asset value.

Considering the fact that the Bitcoin fund holds 174,174 Bitcoins, the total underlying value stands around $830 million, when considering a Bitcoin price of $4,775.04. However, as mentioned earlier, the fund has a market cap of $1.8 billion. This is a major value disconnect that is ultimately a disaster waiting to happen. As is the case with all bubbles and massive premiums, at some point the euphoria will fade away and unsuspecting investors will be left holding the bag.

According to MarketWatch, Grayscale Investments is currently planning to uplist the Bitcoin Investment Fund to the New York Stock Exchange in a $500 million public offering deal. However, the SEC is still set to rule on two proposed Bitcoin ETFs, which could make and break Grayscale’s NYSE ambitions. One thing is clear though, the Bitcoin Investment Fund is a dangerous vehicle that is currently trading at unsustainable levels compared to the underlying Bitcoin asset. Investors should take note and understand the risks that are involved with this investment fund; always know what you are investing in.

The following two tabs change content below.

Matt Rego

Matt is the Founder and CEO of Spotlight Growth, a full service investor relations and awareness service provider. Prior to launching Spotlight Growth, Matt worked six years within the investor relations industry, most recently serving as Vice President of Sales and Marketing at Global Discovery Group, Inc. In addition, Matt has been a financial writer and analyst since 2010 and investing in the stock market since 2007. Articles and content have appeared on well-known financial websites, such as: Investopedia, Google Finance, Yahoo Finance, ValueWalk, Minyanville, Seeking Alpha, CBS MoneyWatch, Investment Underground, Emerging Growth, Blasting News, GenYWealth, and more. In addition, Matt has received an honorable mention in Barrons’ and the New York Post. Matt graduated from the University of Minnesota with a Bachelor’s Degree in Finance.