> This represents an interesting arbitrage opportunity. This could end up like PHYS or SBT/CGT where they tend to trade at a discount to NAV.
It should trade at a discount to NAV. Bitcoin held indirectly through fractional ownership of an entity that can be defrauded or bankrupted is worth less than Bitcoin I can hold securely myself.
But since traders can short the Trust, there's a real possibility that a short squeeze could drive the price of shares much higher than NAV.
For example, see what happened to Volkswagen stock when there weren't enough shares for short sellers to cover.
I think this is made for rich people who don't understand computers let along technicals of bitcoins, who want to own hundreds of thousands of dollars or even millions worth, but don't want to worry their computer getting hacked or just even stop working, everyone has had that happen before.
This trust could be hacked, and it is probably a much larger target than any individual investor's bitcoin wallet. I think the risk of this trust having all of its bitcoin stolen, leaving the investors completely screwed, is pretty high.
If they actually use cold storage - as they say they do, then those bitcoins aren't going to be stolen. It would be far more likely that the system that accounts for ownership would get attacked, and that is a risk that existed long before bitcoin (and a problem solved by direct bitcoin ownership).
For some reason I suspect that were the trust hacked and all your bitcoin nabbed, then you'd also discover that there was no recourse to recoup from anyone due to the way the corporation is set up?
It should trade at a discount to NAV. Bitcoin held indirectly through fractional ownership of an entity that can be defrauded or bankrupted is worth less than Bitcoin I can hold securely myself.
But since traders can short the Trust, there's a real possibility that a short squeeze could drive the price of shares much higher than NAV.
For example, see what happened to Volkswagen stock when there weren't enough shares for short sellers to cover.
http://www.reuters.com/article/us-volkswagen-idUSTRE49R3I920...
If the Trust stays small, that's a real risk/opportunity.
If the Trust gets large, then it could have a dramatic effect on the price of Bitcoin itself.