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Wall Street strategist Tom Lee predicts that the Bitcoin Investment Trust (OTC: GBTC) could triple in value by 2022 if its bitcoin price forecasts turn out to be correct.
Lee, who co-founded the market strategy firm FundStrat Global Advisors, has forged a reputation as both a stock bear and a bitcoin bull. He set a "cautious" price target of 20,000 bitcoins in 2022, and he maintained this price target even during the severe market correction that was initiated by the banning of initial offers of coins and exchanges of bitcoins.
Now, Bloomberg reports that Lee advises FundStrat clients that Bitcoin Investment Trust's publicly traded share price has the potential to triple if its bitcoin forecast is accurate. At present, Bitcoin Investment Trust – Barry Silbert's flagship product of Grayscale Investments – is the only publicly traded bitcoin investment vehicle in the United States available to institutional investors. Unlike most companies that have requested bitcoins ETFs (none have yet been approved), GBTC directly holds the underlying assets instead of trading derivative contracts.
The value of the trust for investors has been debated in recent months as its shares traded at a significant premium to the net asset value (NAV) of the assets underlying. At some point during the month of August, GBTC shares jumped to double the net asset value, although the gap stabilized at around 20% in October.
Despite the high price, Lee wrote in a report that "GBTC at $ 688 and with 20% NAV premium is an attractive way to acquire a bitcoin exposure", indicating that the NAV spread is inaccurate because it does not take into account the value of coins dumped from bitcoin money and gold bitcoin, altcoins created from bitcoin forks. When Lee wrote his report, these assets added $ 53 to the net asset value of GBTC shares.
However, Lee advises investors to be aware that GBTC could face liquidity problems in case of market panic.
"What could go wrong?" Lee wrote. "The biggest risk, in our opinion, is that the GBTC, as ETN [exchange-traded note] could face a liquidity problem – if there is a total panic." But given the highly controlled guard of GBTC and its underlying bitcoin positions, we see this as a short-term issue. "
At the time of writing, the shares of GBTC were trading at $ 704, while the bitcoin was valued at a world average of $ 5,953 after an increase of one day by 8%.
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