Grayscale plans to convert GBTC into a trust and make it a spot ETF in order to lower the 2% annum management fees and increase retail investor interest.
GBTC trades at a discount of 24%, giving investors a strong reason to purchase the trust, assuming that the SEC approves it as a spot ETF.
Grayscale Bitcoin Trust ( OTC:GBTC For complete beginners, ) is the best way to invest in Bitcoin. With a market capitalization of $800 billion, Bitcoin is the leader in cryptocurrency.
Over the past 10 years, Bitcoin has outperformed Gold and the S&P 500 by a large margin. It’s not surprising that investors are searching for ways to invest 21st century digital gold.
There are many altcoins, but Bitcoin is the king. I believe that most crypto investors should make Bitcoin their foundation.
There are many ways to get Bitcoin exposure.
BTC can be bought on an exchange
Investing in crypto-miners: Marathon Digital Holdings NASDAQ: MAARA
Invest in a Bitcoin proxy with MicroStrategy (NASDAQ MSTR).
Invest in a Bitcoin Futures eTF: Proshares Bitcoin Strategy EDTF (NYSE: BIO).
Invest in a Bitcoin Trust Grayscale Bitcoin Trust (OTCMKTS OTC/GBTC).
An article I wrote on the advantages of MicroStrategy stock generated a lot of questions by readers who weren’t sure whether to purchase GBTC or MSTR.
This article will explain the advantages of owning GBTC, and how the SEC Spot ETF Decision could provide a quick 24% yield once approved.
What is Grayscale Bitcoin Trust and how can it help you?
GBTC, an OTC trust that offers easy and simple exposure to Bitcoin with more than $28 billion in AUM, is available. Founded in 2013, GBTC has grown by a staggering 29,000% and currently holds 654,885 BTC.
You can buy GBTC from any full-service broker like Fidelity and TD Ameritrade, and you can also control the underlying amount of BTC for each trust share.
Each share controls approximately 0.00092922 BTC (approx. 92,000 satoshis, but you will need to pay a 2% annual fee to the trust for storage and management expenses.
Unfortunately, you can’t trade GBTC via stock trading apps such as Robinhood or Webull. Grayscale is trying to fix this problem by converting GBTC into a spot-ETF.
Get GBTC at a Discount of 24% and Wait for the SEC Spot ETF Verdict
Despite rising Bitcoin prices, GBTC trades at a 24% discount.
Many crypto investors dislike paying a 2% annual fee and would rather invest in alternatives such as MicroStrategy, ProShares Strategy Bitcoin Exchange (NYSE: MSRT), and even crypto miners like Marathon Digital Holdings and Riot BlockChain NASDAQ: ROOT.
Grayscale is unable to market GBTC because the Bitcoin trust trades in the OTC markets. Robinhood’s 17,000,000 users can only buy NASDAQ & NYSE equities. This prevents Grayscale deriving new capital for their fund.
Grayscale applied for a spot ETF in October 2021. However the SEC continues delay its decision because of fears of Bitcoin spot-ETF manipulation. Grayscale is not able to prevent the manipulation of BTC markets, which is something that the SEC is concerned about.
Although 3 Bitcoin futures ETFs have been approved by the SEC, it remains cautious about a spot ETF.
The underlying ownership of Bitcoin is what makes a spot ETF different from a futures ETF.
Futures ETFs are funds that allow you to buy or sell contracts representing the Bitcoin value, but not actually own any Bitcoin. Spot ETFs allow you to buy Bitcoin immediately and are subject to manipulation and wild price swings.
Grayscale will not give up. I believe the SEC will eventually approve the spot ETF because of pressure from third party supporters. The future of global finance will be heavily influenced by Bitcoin and the SEC will not be able stop investors purchasing spot ETFs.
If granted, I expect investors will buy up GBTC shares fast and grab the 24% discount.
Why GBTC vs Bitcoin on an Exchange?
There are many risks involved in holding Bitcoin, which crypto investors need to be aware of.
Scammers and hackers steal Bitcoin by many methods, including hacking private keys, spam email addresses, exchange hacks and phishing scams.
Bitcoin is not regulated by the government. This makes it very difficult to recover Bitcoin if it’s been stolen.
While the arrest of two criminals who took $4.5 billion in crypto was a positive step, investors need to understand that crypto has its risks.
To deter hackers, I keep Bitcoin in cold storage. However, I also have GBTC in my IRA to diversify my purchases.
GBTC is the ideal solution for those who want to invest in Bitcoin, but don’t know how to set up a crypto wallet or purchase BTC on an exchange.
Which is better: GBTC, or MSTR?
Because each share has its own pros and cons, I have both GBTC shares and MSTR shares.
MicroStrategy has over 125k BTC. They plan to use future cash flow to acquire more Bitcoin. The stock is part of my growth portfolio. I want to be exposed to Michael Saylor’s growing BTC stash.
To provide financial security for my retirement, I have GBTC. I am currently 35 years old and will not have to access the funds in the next 24. I can retire with dignity knowing that my GBTC is mine.
Conclusion
GBTC is my top recommendation to investors who want long-term exposure to Bitcoin. Grayscale will convert the trust to a Spot ETF if approved. The 24% discount opportunity will cease to exist.
