Citron Compares Bitcoin To Other Commodity Trusts, Still Sees Big Downside To GBTC

Bitcoin has been on fire in recent years, with the NYSE Bitcoin Index up another 360 percent year-to-date. However, the higher bitcoin prices soar, the more bitcoin bears become convinced the cryptocurrency enthusiasm has created a textbook market bubble.

On Tuesday, one of bitcoin's highest-profile bears reiterated his belief that the Bitcoin Investment Trust GBTC is overvalued by more than 50 percent.

Citron Research’s Andrew Left, who first announced a short position in the GBTC on Sept. 1, provided some insight into his $500 price target for the trust, which currently trades at around $775. According to Left, the GBTC trades at a 70 to 90 percent premium to its net asset value, completely disconnected from the value of its underlying assets.

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Left said the fact that the GBTC couldn’t get its Bitcoin holdings insured at a price of $2,200 per coin means there’s no way they could get them insured anywhere close to the current price of around $4,200 per coin.

“If something is so dangerous that it is uninsurable, do you want to own it?” the new Citron posting reads. “Worse, do you want to own a fund that owns it, while paying a price 70% higher than what the underlying asset is actually worth?”

To prove the point, Citron included a number of popular ETFs along with estimates of their current price premium to NAV. The SPDR S&P 500 ETF Trust SPY trades at a 0.0015 percent premium to NAV, the SPDR Gold Trust (ETF) GLD trades at a 0.028 percent premium to NAV and the iShares Silver Trust (ETF) SLV trades at a 0.01 percent premium to NAV.