GBTC is not just about the same as compared to Bitcoin. If I was thinking of buying GBTC right now, I would have to think if I should buy MicroStrategy instead. In the form of protection, you can obtain exposure to BTC, equivalent to purchasing a stock. Grayscale Bitcoin Trust is funded by Grayscale Investments, LLC (Grayscale) which is regarded as one of the world’s biggest digital currency asset managers. In absence of a pure tracking stock, traders/investors have plunged into the … By the end of May in 2015 it was trading at a 137% premium to its actual Bitcoin stake. anhqnguyenm. It hit the market earlier this month. Grayscale's mark-up has fluctuated between 6% and 38% since 2019 -- until last week. Owing to the many risks involved with cryptocurrency, especially ownership, the GBTC holds a premium over buying bitcoin outright. Bitcoin is your future. During the week's wild trading there were moments when it traded at a slight discount. All aboard the Bitcoin/GBTC train! The GBTC premium is referred to as the percentage above of the bitcoin spot price traded by the Grayscale Bitcoin Investment Trust (GBTC). It is important to remember that these are not real common stocks when considering acquiring Grayscale Bitcoin Trust shares. Which one is right for you? The GBTC premium can be seen as an indicator that tends to differentiate the tops/bottoms in the business cycles on the market. Fear & Greed Index at Peak Ready for BTC Dump, HIGHLY ANTICIPATED SFT CRYPTOFOLIO PROJECT ‘WOLVES…, CoinStats raises $1.2 million pre-seed round of…, Orion Protocol to Launch NFT Aggregator and NFT…, Crypto Millions Lotto cements its digital lottery…, Handycon: World’s First Handshake Protocol…, JPMorgan Advises investors to put 1% of their…, The number of Bitcoin ATMs worldwide is close to…. Shares track the bitcoin market price, less fees and expenses. More investors are attempting to sell their GBTC than buy, resulting in the fund acquiring less new BTC. A private pool of wealthy investors is welcomed by Grayscale to contribute cash to the fund, which it uses to acquire large quantities of Bitcoin. One packs an annual management fee that is four times greater than the other, but the other trades at a ludicrous premium to its net assets. Bitcoin was first traded back in 2009. Every time I have sold, based on a price drop in bitcoin, I have ended up losing money on paper. With GBTC, you don’t have to think about your issues related to purchasing, storing, and safeguarding your BTC. What is a trust? Bitcoin is your insurance to have a great future. Returns as of 03/22/2021. You lose access to your GBTC if it goes down, is taken down, knowledge issues, etc. Shares in a company or corporation are supposed to be securities. This metric can be a valuable metric to track how far away a security is trading away from its true value. Market data powered by FactSet and Web Financial Group. ; GBTC can be an excellent buy for the casual investor who doesn’t want to trade cryptocurrency on an exchange (but intends to purchase Bitcoin). Here's What I'm Buying (and Why), I Own Grayscale Bitcoin Trust, but It May Not Be Right for You, Copyright, Trademark and Patent Information. Conversely, when you buy GBTC when the premium is high, if you sell when the premium is lower, you could lose money. While GBTC is a trust that only holds Bitcoin, the GBTC stock price does not exactly match the underlying Bitcoin price. Osprey Bitcoin Trust is still in the honeymoon phase with investors, and that's dangerous. In certain aspects, the GBTC is similar to a conventional asset; you can only trade it on weekdays, and only selected investors can trade it. Since the GBTC premium varies depending on supply and demand, it is important to plan for how the returns will be impacted. Osprey Bitcoin Trust is the shiny new toy for Bitcoin bulls and bears looking for a stock exchange-listed vehicle. Bitcoin Investment Trust partners with Xapo, a wallet service for cryptocurrencies. If you are waiting on the sidelines, note that institutions are already making bold moves. Love to write about market conditions and forecasts. With just $77 million assets under management the trading will be volatile. When GBTC carries on these new obligations, they charge a 2 % monthly maintenance fee to their customers, which is very costly relative to most trusts for other cryptocurrencies. Back then, you could buy one of the new digital tokens for less than 1 cent. Stock Advisor launched in February of 2002. Mar 17, 2021 9:25AM EDT . On the other side, when you purchase Cryptocurrencies, you buy the Bitcoin (BTC) cryptocurrency directly and not share in a Bitcoin investment trust. Grayscale Bitcoin Trust has been around since 2013. Technically, the U.S. Securities and Exchange Commission (SEC) has yet to officially approve a bitcoin ETF. A little over a week ago, when bitcoin had a large price correction, I sold my position. Thanks to a popular investment fund called GBTC, buying Bitcoin is easy as purchasing stock. Frequently I'll see GBTC make a huge move (sometimes over 20% in one day) while Bitcoin makes a small move (say less than 5%), or vice versa. ByteTree claims roughly 81% of institutional bitcoin purchases since the last halving has come in the form of GBTC. Grayscale Bitcoin Trust (BTC) (OTCMKTS:GBTC) Vs. AGD, ACP, AABVF, AOD, AFB, and CBH. gbtc premium 1. The biggest knock on Grayscale Bitcoin Trust is that it charges 2% a year in management fees, and like mutual funds it is taken out gradually over the course of the year. Correction: The original version of this report misstated the year the Grayscale Bitcoin Trust went public. With assured protection, GBTC allows one to buy and keep Bitcoin in a simplified manner. GBTC is an investment fund in Bitcoin that is held solely in the standard cryptocurrency. You might hear that GBTC or another Grayscale product has a “premium.” This is a reference to the difference between the value of the holdings of the trust vs. the market price of the holdings. GBTC shares are part of an open-ended grantee trust. By the time the closing bell sounded on Friday, Grayscale's trust was at a rare 1.4% discount to its corresponding Bitcoin assets. Understanding the Premium on Grayscale Products like GBTC, ETHE, ETCG, LTCN, BCHG, etc. The biggest selling point on Osprey Bitcoin Trust is that it charges just 0.49% in annual fees. You can also own Bitcoin directly, and a growing number of fintech platforms are making it easier than ever. 3) GBTC trades above the spot price (current price) of BTC at a premium. Grayscale Bitcoin Trust is a financial vehicle that allows investors to swap trust securities containing broad Bitcoin pools. We're saying that investors were willing to pay more than double what it was actually worth. Top 10 cryptocurrencies to invest in 2021. Xapo stores all the bitcoins of the Grayscale Bitcoin Trust in cold storage safe, disconnected, and on an actual physical device, essentially stopping any unauthorized Internet access. If you plan on holding Bitcoin for at least a couple of years it would make sense to just buy in directly. Bitcoin vs. Bitcoin Cash: An Overview . Osprey Bitcoin Trust is the shiny new toy for Bitcoin bulls and bears looking for a stock exchange-listed vehicle. If you think you'll be in and out within 18 months that's the kind of speculation that can cost you more in fees than it would buying Grayscale at a broker that offers zero commission trading and seeing 2% a year erode gradually. The GBTC is an investment trust or fund that stores Bitcoin on your behalf and secures it. 2) Inside the conventional financial system, Grayscale is nested. Crypto/Bitcoin traders on YouTube and other channels have often mentioned GBTC instead of just regular Bitcoin. We're not talking about a  37% mark-up on a baseline of 100% for Bitcoin. $GBTC vs. $OBTCGBTC:Price: $43.20NAV: $43.81 (1.4% discount)Annual Fee: 2%AUM: $30.7 billionOBTC:Price: $39.92NAV: $15.87 (152% premium)Annual Fee: 0.49%AUM: $77 millionIf you're looking at the lower fee and NOT the premium you're doing it wrong. I think people are buying GBTC with a long term outlook expecting it to 'double in 2016' based on numerous media reports. If Grayscale seemed outrageous at a 137% premium when there were no other stock exchange-listed alternatives why is Osprey commanding a 152% premium? Scarcity will make this a bucking bronco. It closed out the week at nearly $40 with a net asset value of $15.87. It has just $77 million in assets under management, so it's tiny. Bitcoin Trust (BTC), Bitcoin Cash Trust (BCH), Ethereum Trust (ETH), Ethereum Classic Trust (ETC), Horizen Trust (ZEN), Litecoin Trust (LTC), Stellar Lumens Trust (XLM), XRP Trust (XRP), Zcash Trust (ZEC), and Grayscale Digital High Cap Fund are the 10 cryptocurrency investment items currently provided by Grayscale. There are three major differences between GBTC and buying Bitcoin which can be briefly described as follows: 1) Grayscale charges a 2 % annual fee for GBTC possession. Osprey’s Bitcoin Trust (OBTC), which was launched Feb. 16 as a low-cost alternative to the Grayscale Bitcoin Trust (GBTC), has reached $150 million in assets. Bitcoin would be lost if you forget private key credentials, even if the key is leaked to others or stolen. It's never been easier to buy Bitcoin (CRYPTO:BTC), but your options are limited at most traditional brokerages. It was harder to buy cryptocurrency four years ago, and there were plenty of horror stories about wallet security. It's not even close. 0. gbtc premium. The trust actually moved higher last week despite Bitcoin itself taking a big hit. The shares in the fund follow Bitcoin’s price. In comparison, another drawback to purchasing bonds instead of buying real BTC is that the cryptocurrency stays open 24/7 while the stock market shuts on weekends. 1 share in the trust is equivalent to 0.00096312 BTC. Better Buy: Bitcoin Investment Trust vs. Bitcoin (BTC) ... Grayscale Bitcoin Trust (BTC) OTC: GBTC $52.95 up $2.15 (4.22%) Related Articles. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. You will have your future secured should buy MicroStrategy instead other channels have often mentioned instead! 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