Here's Where Andrew Left Has It Wrong On Bitcoin Investment Trust (OTCMKTS:GBTC)

Chances are that a good portion of those reading are familiar with Andrew Left. For those who aren't, he's the short seller that came to prominence after publishing a research report on his Citron Research website accusing Valeant Pharmaceuticals Intl Inc (NYSE:VRX) of the fraudulent invoices that eventually turned out to be the downfall of the then pharmaceutical behemoth.Anyway, Left's latest target is Bitcoin Investment Trust (OTCMKTS:GBTC).Here's a Tweet from in and around the closing bell yesterday:

$GBTC Warning Investors- No Reason this trades higher than $550 a share. Do you know what you own? The most dangerous way to own Bitcoin pic.twitter.com/aVz15iv4GI

— Citron Research (@CitronResearch) August 31, 2017

Basically, what Left is saying is that the current price of Bitcoin Investment Trust is far too high, with this statement based on the fact that Bitcoin Investment Trust has risen proportionately higher over the last few months than has the underlying asset it represents – bitcoin. GBTC Daily ChartAt a glance, that's a pretty fair statement. These sorts of funds (and that's what Bitcoin Investment Trust is, at core, or at least that's what it's trying to be – an ETF) are supposed to represent fluctuations in the valuation of the underlying assets in which they're based. A metric of net asset value (NAV) is used to determine the value of the fund based on how much of the underlying asset it holds and any deviation from this NAV figure can be used to form a bias as to whether the fund is overvalued or undervalued. In this instance, Bitcoin Investment Trust is trading at a close to 130% premium to NAV.The thing is, we disagree with Left.Regular readers will know that Bitcoin Investment Trust is one that we have covered on a number of occasions over the last six months or so. It was top of the list on our Top 3 Bitcoin Stocks back during the middle of August and we have often pitched it as one of the most secure ways to gain access to the meteoric rise of bitcoin without actually having to buy the underlying asset.That's reasonable, but how can we justify a 130% premium to NAV? Well, sure, this is an ETF and ETFs offer an alternative way to buying the underlying assets they represent. But that's where the comparison pretty much ends. Bitcoin has a far higher barrier to acquisition than does something like gold or silver or a basket of stocks pretty much any other asset that trades on an open market.People still don't understand how to buy bitcoin and, right now, many don't want to learn. Bitcoin Investment Trust totally removes this barrier. And that's not all. Buying bitcoin is just one part of the equation. Storing it, and more importantly, storing it securely, can be incredibly difficult. Again, Bitcoin Investment Trust removes this barrier.in other words, anybody that is picking up an exposure to Bitcoin Investment Trust instead of buying bitcoin is paying a premium to avoid the standard and above-described barriers to entry that they would normally have to overcome if they were to buy the underlying asset. This more than justifies a far higher premium to NAV than would be generally acceptable on a run-of-the-mill ETF.What Left is saying is nothing new. CNBC said exactly the same thing back at the start July. At that point, Bitcoin Investment Trust went for $400 a piece and we told our readers not to listen to CNBC commentary as it was ill-conceived and misplaced. At last close, Bitcoin Investment Trust went for $1,005 – a 151% appreciation in an eight-week period.We aren’t saying that bitcoin, and in turn, Bitcoin Investment Trust won't correct near term. There's a good chance that one, and in turn the other, will do just that. What we are saying, however, is that a premium to NAV is a weak argument for an overvaluation in this instance.Check out our previous coverage of this one here. We will be updating our subscribers as soon as we know more. For the latest updates on GBTC, sign up below!Image courtesy of fdecomite via FlickrDisclosure: We have no position in GBTC and have not been compensated for this article.