The bitcoin landscape has changed dramatically in recent months. From massive price gains to hard forks and more, investors are always working to catch up with the latest developments.

Bitcoin Investment Trust (GBTC), a publicly traded vehicle linked to the leading cryptocurrency, has been one of those developments; the recent advent of bitcoin futures contracts has been another. Andrew Left, the notorious short seller and founder of Citron Research, has indicated that the combination of these two new areas could provide savvy investors a way to generate vast profits.

Buy Futures, Short Sell the Trust

According to a report by Bloomberg, the Bitcoin Investment Trust has holdings worth $1,601 a share, although it trades at a price which is more than double that amount. If a short seller is able to successfully bet that this gap will shrink, he could make lots of money. One way to do that? Buy newly released bitcoin futures contracts, then short sell the Bitcoin Investment Trust.

Andrew Left aims to do just that. In a tweet this week, he indicated that "Citron would not be pounding table if not appropriate. Thank you for the 70 percent profit."

Speaking on Bloomberg Television, Left added, "there's an incredibly naive investor base behind this who doesn't want to check the extra boxes off to open a futures account." He blamed the gap between the trusts holdings and price on investors "that do not know what they're doing." (See more: Why Buy This Expensive Bitcoin Trust Instead of Actual Bitcoin?) The biggest problem for investors adopting the short-sell strategy is finding shares to borrow.

GBTC has followed the rest of the cryptocurrency market, climbing to new highs in recent weeks. According to Barron's, Citron had expected that GBTC would fall to $550 a share. As of earlier in the week, it was trading close to $3,500, at a 100% premium to the underlying cryptocurrency.

Bitcoin Futures Sway the Market

Futures contracts for the world's leading cryptocurrency by market cap have been long-awaited, but they've made their debut in the real investment world. They are already showing signs of efficiency. In just a week or so of trading, futures prices have dramatically closed the gap between initial trading levels and the actual price of the cryptocurrency.

Wondering how you can get in on the new futures market for bitcoin? An increasing number of exchanges are offering futures directly at this point. However, the landscape is changing rapidly, and it pays to not get set in your ways.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. 

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.