Tuesday, January 30, 2018

GBTC Splits 91-for1

This morning I took a peek inside of my self-directed 401(k) in order to update my records, and I noticed that the value on my spreadsheet was down by several thousand, while the stated value of the account at the brokerage was still correct.

It was my Grayscale Bitcoin Investment Trust (GBTC) position, with a pre-market printed price of $19.14, rather than the $1700-$1800 per share price that I've been accustomed to seeing lately.

Sometimes this kind of thing is just a misprint of the price when the information coming through the relevant networks gets scrambled. Other times, it's something else. So I scanned right, and sure enough, it was that something else: GBTC just completed a 91-for-1 split.

Basically, in order to make the stock more accessible to a wider number of potential owners, the company has increased the share count without changing the value of the stock. The entirety of the trust is still worth what it was prior to the split, but now there's ninety-one times the number of pieces of the whole pie, which each being smaller are much easier to trade (if you're trying to maintain defined allocations in a portfolio, that is; the actual buying and selling of GBTC shares is just as easy as it was before).

This is excellent news for me as I hold GBTC in my 401(k) as part of a crypto-inclusive take on Harry Browne's "Permanent Portfolio." It did great for me, doubling the account up until I rebalanced the portfolio in December (which by blind luck I did on December 18th, right before the Bitcoin price began to fall from its high to current levels). However, after doing so I was left with so few GBTC shares that continuing to rebalance in order to keep that portion of the portfolio within a 25% allocation was going to be very difficult. I mixed in MGTI shares to the allocation to give it some more flexibility, but now I may not need to maintain that stake for that purpose.

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