“Lack of liquidity, accessibility and transparency can all cause significant price dislocations. With the BTC Trust, it is far easier for people to access the trust than the underlying Bitcoin. With the pool of available money going into the trust faster than into Bitcoin, that price rises far off of its underlying value,” he told Finance Magnates.
As to why the premium is maintained even when considering the equally relative ease with which the shares can be sold off, this too is a matter of supply and demand. “The supply of money ready to go into exchange traded investments, like the trust, is just much much greater than the supply of money ready to go into bitcoin, which, for all of the attention it gets, is still a very niche thing,“ he argued.
Bitcoin is a weird place right now, and the slow creep out of the shadows will certainly have some rough patches like this. While I have no strong views on what to do with bitcoin or where it is going, it sure is interesting to watch!