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This is a market which has bubbles for every taste. However, the Grayscale Bitcoin Cash Trust (OTCQX:BCHG) can arguably beat them all when it comes to lunacy.

The reason is rather simple. The Grayscale Bitcoin Cash Trust holds only one asset, Bitcoin Cash. Anyone wanting to invest in Bitcoin Cash, could do so either by buying BCH (Bitcoin Cash) directly using a multitude of crypto brokers, as well as many e-wallets, or do so by buying BCHG. Thus, in the best of times:

  • BHCG could perhaps trade at a tiny premium due to convenience, safety or because it’s eligible to be held in a IRA (Individual Retirement Account);
  • Or trade at a slight discount, since BCHG actually pays a 2.5% annual management fee, whereas holding Bitcoin Cash is free.

Under any circumstance, BCHG should more or less very closely reflect the value of the Bitcoin Cash it holds.

Now, the amount and value of this Bitcoin Cash held by BCHG are known and public quantities. Grayscale updates its holdings daily, in this website. Currently, this is how much Bitcoin Cash BCHG holds per share (red emphasis is mine):

Source: Grayscale.co

Since we know how many BCH (Bitcoin Cash) each BCHG share holds, it’s straightforward to calculate how much each BCHG share should be worth. It should be worth the BCH quote x 0.00933798.

We can check BCH’s current price easily at CoinDesk:

Thus, a proper value for BCHG would be $320.3 x 0.00933798 = $2.99.

Now where did BCHG close today? $33.96.

Thus, ladies and gentlemen, BCHG closed at a 1,035% premium to its BCH holdings. It closed 11x higher than it should. For something whose value is easy to calculate.

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It’s not like Grayscale hides how obvious this is, either:

Just imagine what this means. It means there are buyers in this stock for whom, buying the “crypto Bitcoin Cash” story is so powerful that they are ready to pay 11x the going rate for what they’re buying. It’s complete and utter lunacy, no further explanation is necessary.

Over time, these buyers will need a lot of luck not to lose most of their investment in BCHG.

Selling Short

This market behavior is so lunatic that some of you might immediately be interested in selling this stock short. However, there is no stock available to borrow and sell short. And indeed, a short position would likely face extreme pressure to be bought in.

Hence, the most we can do here for now is to warn any potential buyers to stay clear of this lunacy.

Information On Bitcoin

In general, currently, there ought to be a lot of interest in cryptos and Bitcoin (not Bitcoin Cash) in particular.

A while ago I wrote a long series on Bitcoin which remains very relevant today and can help most people understand Bitcoin better. I’m going to leave links here for that past series:

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.



Via SeekingAlpha.com

  • bitcoinBitcoin (BTC) $ 36,443.00
  • ethereumEthereum (ETH) $ 1,172.56
  • tetherTether (USDT) $ 0.999383
  • litecoinLitecoin (LTC) $ 143.08
  • bitcoin-cashBitcoin Cash (BCH) $ 482.81