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Two Quick Notes on Today’s Trading

Today, Federal Reserve Chairman, Jerome Powell spoke to Congress. In his remarks, Powell made it clear that the Fed is likely to hike rates again this year and that he is committed to reducing inflation to the 2% target. He also reiterated that despite the recent declines in the rate of inflation, it’s not even close to 2% right now. This was a hawkish message consistent with the “higher for longer” mantra that he’s been repeating for the last year. DKI has been saying for 12 months that the “pivot people” who have been calling for the Fed to pivot to lower rates will one day be right, but it’s not coming soon. The market may not believe him, but we do.

 

Second, $GBTC is up a lot over the past two days and the discount to NAV has closed a considerable amount. $GBTC is a trust that owns Bitcoin and makes it possible to have exposure to Bitcoin for people who don’t want to self-custody or have to own everything in a brokerage account for regulatory or contractual reasons. It used to trade at a premium to the value of Bitcoin and for the last year or so, has traded at a substantial discount.

 

Grayscale has applied to the SEC to convert to an ETF which would allow the destruction of shares and for the company to buy back shares when they trade at a discount. This would eliminate the discount, but the SEC hasn’t approved the application. This week, BlackRock filed for an ETF which would match the spot price of Bitcoin.

 

BlackRock has a long record of getting these applications approved. The probability that the SEC would approve the BlackRock ETF but reject the Grayscale application again is low. In addition, BlackRock buying Bitcoin for an ETF would be a big move towards institutional acceptance of the apex cryptocurrency. DKI intends to hold GBTC until the discount to NAV closes. At that point, we would recommend converting out of the trust/ETF and buying Bitcoin, but only if you intend to self-custody.

We understand that moving Bitcoin to self-storage can be complicated and scary for a lot of people. Don’t worry. You can find our simple step-by-step guide on one way to do it safely here.

 

I’m at a Real Estate conference in Newport right now. Will let you know if I learn anything interesting, different, and worth sharing over the next few days.

 

Information contained in this report is believed by Deep Knowledge Investing (“DKI”) to be accurate and/or derived from sources which it believes to be reliable; however, such information is presented without warranty of any kind, whether express or implied and DKI makes no representation as to the completeness, timeliness or accuracy of the information contained therein or with regard to the results to be obtained from its use.  The provision of the information contained in the Services shall not be deemed to obligate DKI to provide updated or similar information in the future except to the extent it may be required to do so. 

 

The information we provide is publicly available; our reports are neither an offer nor a solicitation to buy or sell securities. All expressions of opinion are precisely that and are subject to change. DKI, affiliates of DKI or its principal or others associated with DKI may have, take or sell positions in securities of companies about which we write. 

 

Our opinions are not advice that investment in a company’s securities is suitable for any particular investor. Each investor should consult with and rely on his or its own investigation, due diligence and the recommendations of investment professionals whom the investor has engaged for that purpose. 

 

In no event shall DKI be liable for any costs, liabilities, losses, expenses (including, but not limited to, attorneys’ fees), damages of any kind, including direct, indirect, punitive, incidental, special or consequential damages, or for any trading losses arising from or attributable to the use of this report. 

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