Coins & Money

Should Bitcoin “Coins” Really Trade at a Premium to Spot Prices?

Whether you are a collector, investor or just happen to love cryptocurrency, just bringing up Bitcoin can cause a debate. The reality is that cryptocurrencies are here to stay. At least that is what millions of “HODLrs” are expecting to be the case. A twist in cryptocurrency trading took place after a physical Bitcoin was sold by GreatCollections on November 17, 2021. The so-called “Baby Cas” is actually a 25 BTC physical coin that was issued by Casascius in 2011.

The “Baby Cas” coin sold for $1,698,750 ($1.51 million before the buyer’s fee) on Sunday November 14, 2021 after 118 bids were received. The starting bid was a mere $1.00, but that was a placeholder from the October 4, 2021 date that bids began. GreatCollections notified the public in its press release that the total sales for the single day exceeded $5.25 million.

With over 10,000 page views for the auction, the final price represented what was shown to be a $49,700 premium over the price of Bitcoin at the time that bidding ended. (Image below by GreatCollections)

What collectors and investors alike should consider here is that the “Baby Cas” 25 BTC coin was graded by PCGS alongside the holy grail of crypto physical coins – the “Gold Cas.” That was the famous 1 ounce Gold Casascius coin with 1000 BTC stored. The current value of the “Gold Cas” was shown to exceed $60 million, making it the most valuable coin in the world by far. That is impressive considering that it was issued only 10 years ago and issued by a private company rather than by a government

Casascius, the company created by Mike Caldwell, issued physical bitcoins from 2011 to 2013 in various denominations from 0.1 BTC to 1000 BTC (the “Gold Cas”). Over 800 of the 25 BTC denomination coins were produced, and less than half of that remain unredeemed.

The coin that sold is composed of gold and was the second highest auction sale for GreatCollecions in 2021. The other coin being The finest 1893-S Morgan Silver Dollar which Collectors Dashboard first covered in its Key Date Profiles and again as the $2,024,024 sale in August happened.

Ian Russell, president of GreatCollections, said:

“As expected, there was a significant amount of bidder interest for the most important physical Bitcoin ever to appear in auction. We had new bidders register from 14 countries specifically for the Bitcoin auction, not to mention the interest from the traditional numismatic community.”

With a premium of any sort, this $49,700 premium over the spot price of Bitcoin at the time begs a question. Should larger Bitcoin holders start bundling up their digital assets into physical coins now?