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A Publicly Traded Bitcoin Trust to Know About
Gain exposure to Bitcoin via the stock market
Bitcoin, the number one cryptocurrency globally by market cap, has gained a lot of institutional acceptance over the past couple of years. A key way it gained acceptance is via the Grayscale Bitcoin Trust (GBTC), which is a publicly traded digital currency investment product providing exposure to Bitcoin that you can purchase through your preferred brokerage account. GBTC was first launched on September 25th, 2013, as a private placement to accredited investors, and later on, received FINRA approval for eligible shares to be traded publicly. On January 21st, 2020, GBTC became an SEC reporting company, registering its shares with the SEC. GBTC is the first digital currency investment vehicle to attain the status of a reporting company by the SEC.
GBTC currently trades on the OTCQX, an over-the-counter market. As stated earlier, you can purchase shares of it via your preferred brokerage account. One of the key advantages that GBTC has over investing in Bitcoin directly is that it can be bought in tax-advantaged accounts like IRAs and 401(k)s. That means that you can be eligible to gain long-term exposure to Bitcoin tax-free. The following two points will help to further breakdown GBTC:
1. Specifications
2. Disadvantages
1. Specifications
GBTC’s benchmark index is the CoinDesk Bitcoin Price Index, which is an index that represents an average of Bitcoin prices across leading global exchanges. As of May 24th, 2021, GBTC has approximately $23.8 billion in assets under management, 692 million shares outstanding, and a price of $33.12. The annual fee of GBTC is 2%. The Bitcoin per share ratio for GBTC is approximately 0.00094. Over the trailing 12 months, GBTC has provided a total return of approximately 293%.
2. Disadvantages
Two of the key disadvantages of owning GBTC rather than Bitcoin directly are its annual fee and its Bitcoin per share ratio. As stated earlier, the annual fee for GBTC is 2%, which is high. You will need to consider the annual fee if you wish to gain exposure to Bitcoin via GBTC. Over time, the annual fee of GBTC will likely decrease as more…
