What is Grayscale Bitcoin Trust? Grayscale Bitcoin Trust is an investment vehicle that allows investors to access BTC through traditional means. In this article, you can access answers to questions such as what is Grayscale Bitcoin Trust, what it offers, what are its advantages and disadvantages. As Kriptokoin.com, we have compiled it for our curious readers.
What is Grayscale Bitcoin Trust?
Grayscale company is the world’s largest cryptocurrency asset manager. Accordingly, the firm manages cryptocurrencies worth close to $20 billion. Grayscale Bitcoin Trust (GBTC), on the other hand, stands out as a popular Bitcoin-focused financial product of the company. With the product, users can invest in crypto money without engaging in risky and complex business such as buying Bitcoin. In this regard, it can be said that GBTC is the world’s largest publicly traded Bitcoin fund. Investors can buy BTC like stocks, without the need for tools far from traditional finance like private keys and crypto wallets. When we add up the current GBTC shares, we see that there are currently 650,000 BTC in the GBTC fund. Although GBTC is like traditional stocks, it fluctuates similarly with the BTC price.
What does Grayscale Bitcoin Trust offer?
The most attractive feature of Grayscale Bitcoin Trust is that it allows you to buy BTC without actually buying BTC. This attracts investors like ARK, Rothschild and Kingfisher who want to invest in cryptocurrency because these institutional investors do not want to be exposed to various factors such as crypto wallet, platform attacks, regulatory moves. In addition, the fact that Grayscale is the first digital asset instrument registered with the US Securities and Exchange Commission (SEC) gives confidence to investors. As is known, the SEC frequently imposes regulations on various cryptocurrencies.
What are the advantages of GBTC shares?
- Buying GBTC shares is pretty easy. Investors can purchase Grayscale Bitcoin Trust shares through their regular brokerage accounts.
- Due to the traditional nature of GBTC, you do not need tools like cold and hot wallets in crypto. Thus, you are also protected from cyber attacks. High-profile crypto attacks will continue to indirectly affect your investment. But your funds will not be lost.
- In late 2019, Grayscale Bitcoin Trust became the first crypto investment vehicle to register with the SEC. Thus, it gave transparency, liquidity and thus confidence to its investors. This is why the SEC is less likely to impose penalties on other cryptocurrencies to GBTC.
- Stocks are fairly traditional investment vehicles. Therefore, investing in BTC as a stock makes your tax reporting easier.
What are the disadvantages of GBTC stocks?
- GBTC has been underperforming BTC since 2021. This poor performance has increased over time. Accordingly, in March 2022, the value of GBTC was 30% lower than the value of BTC. According to some analysts, the main reason for the price drop in GBTC is competition. Grayscale Bitcoin Trust charges its users an annual investment fee of 2%. However, it has appeared in companies with lower wages.
- Grayscale filed with the SEC for a Bitcoin ETF in October 2021. However, the SEC recently rejected this application. If the ETF had been accepted by the SEC, GBTC shares would likely have rallied. After the offer was rejected, the company sued the SEC.
What is Grayscale Bitcoin Trust? How to get GBTC?
GBTC can be purchased on classic stock platforms. However, it is also possible to obtain GBTC via FTX, the largest derivatives crypto exchange. A tokenized version of the Grayscale Bitcoin Trust is available on the FTX exchange. Interested investors can purchase the tokenized version of GBTC by subscribing to FTX and depositing money in their wallets.
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