Grayscale Bitcoin Trust: All That You Need To Know About The GBTC | by Timestamp | Jun, 2021 | Medium — timestampmagazine.medium.com
The Grayscale Bitcoin Trust (GBTC) is a stock market-based approach to invest in Bitcoin. It is among the few financial instruments that let investors exchange shares in corporations that hold significant pools of Bitcoin, with each share valued at or around the price of Bitcoin. The net asset value of GTBC as of June 2021 is around 37.28. Grayscale, a US crypto investment business that is one of the world’s top buyers of Bitcoin, established the trust in September 2013.How Does the Grayscale Bitcoin Trust Work?The GBTC works in the following way:1. Grayscale offers a private pool of wealthy investors to contribute to the fund, which will be used to purchase massive amounts of Bitcoin.2. Grayscale then publishes the fund on public stock markets, allowing everyone to trade shares inside it.3. The fund’s shares mirror the price of Bitcoin, albeit only in approximate terms.The shares in the fund might trade at a bonus or a discount to the current price of Bitcoin. They have always priced at a premium in the past. This is wonderful news for Grayscale and its investors, who profit from the premium, but terrible news for other investors.Why Prefer GBTC?Below are the reasons why investors often prefer purchasing shares in the GBTC rather than buying Bitcoin directly. Make sure that you go through it!· For starters, participating in a Bitcoin Trust allows users to obtain exposure to Bitcoins without constantly worrying about how to keep it, how to abide by the law, or how to file separate taxes. When you are purchasing Bitcoin, you need to deal with so many issues — Do you have to pay someone to keep your Bitcoin safe? How do you keep it? What if your Bitcoin wallet gets hacked? However, in the case of the Grayscale Bitcoin Trust, everything becomes so much simpler.· Secondly, publicly traded Grayscale Bitcoin trusts offer a variety of tax benefits. Certain IRAs and other brokerage firms will not provide tax benefits for Bitcoin transactions. Grayscale’s Trust allows those investors to have exposure to Bitcoin in a tax-efficient manner.· Third, cryptocurrency trading is extremely exclusive. Bitcoin cannot be traded against a lot of shares. This effectively isolates the cryptocurrency from the regular economy. Traditional investors can invest in the crypto economy as soon as Bitcoin is listed on the stock exchange but in a very expensive and limited fashion.· Grayscale has declared its plan to convert GBTC to an exchange-traded fund (ETF), providing limitless share issuance. It would require the stock to trade at or near the GBTC net asset value immediately.· Management fees will not allow GBTC to trade at a loss to NAV, particularly as GBTC at NAV has a cost profile similar to other common means of purchasing crypto over usual holding periods. Furthermore, fee pressure and the launching of the Bitcoin ETF are expected to cause GBTC to reduce its expense ratio.For more updates and information about the GBTC and cryptocurrency, you can stay in touch with us!
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