At iTrustCapital we speak to clients every day who are liquidating GBTC in their IRAs and moving their funds to our platform to directly own Bitcoin and other top cryptocurrencies.  After reading this article and simply seeing the numbers, we suspect that many more investors will do the same.

 

As the cryptocurrency market has been heating up, some investors opted for the perceived convenience of GBTC as opposed to moving funds directly into Bitcoin.  Many are now waking up to the lost opportunity that was right in front of them and kicking themselves for making that decision.

 

Premium Misconceptions

The general thought regarding GBTC’s premium was that the closer the price was to the actual Bitcoin cost, the better the buy was for investors.  However, recently the premium didn’t just collapse, it went negative.  Now GBTC trades well below the actual Bitcoin price, throwing the idea that GBTC is a good buy out the window because there is no telling how much lower it can go.  Can GBTC trade at 25% or 50% under Bitcoin?  Who knows, but why risk your hard-earned money finding out? 

 

The Numbers Speak for Themselves

The returns for those who invested in Bitcoin vs. GBTC are drastically different.  

 

Examples:

If you had invested in the early stages of the 2017 bull run, today your investment would be worth nearly 2x as much in Bitcoin over GBTC.

 

 

Let’s take a look at those unfortunate investors who bought the top of the 2017 bull market.  The premium on GBTC was 100%!  Today the gains in Bitcoin are 10x the gains made in GBTC.

 

 

If you only recently entered the space, the difference is still glaring. An investment at the beginning of 2021 puts Bitcoin gains up 3x vs. GBTC investors.

 

 

Additional points to consider

  • Bitcoin trades 24/7/365 while GBTC only trades while the stock market is open. If cryptocurrency crashes or spikes on the weekend, there is no way to make trades until the opening bell on Monday.

 

  • GBTC has a 2% annual management fee

 

Final Thoughts

Grayscale started the DropGold movement a couple of years ago with the argument that gold is good but Bitcoin is better.  I agree with them that Bitcoin is a modern, better version of gold.  However, their product, GBTC, is not the same as owning actual Bitcoin, and as illustrated above, Bitcoin is far superior to GBTC.  

So we want to start a new movement…#DropGBTC

 

 

 

Important Note: All investments involve substantial risk of loss.  All trading strategies are used at your own risk and you are responsible for the financial resources you utilize.  If the market moves against you, you may sustain a total loss of the initial amount you allocated to the investment.  you should not engage in trading unless you fully understand the nature of the transaction you are entering into and the extent of your exposure to loss.  If you do not fully understand these risks,  you should seek independent advice from your financial advisor.  iTrust is not an investment specialist, tax specialist, financial planner (certified or otherwise), or retirement advisor, and iTrust does not provide investment advice, tax advice, financial planning services, or retirement planning or retirement-specific advice.  iTrust facilitates the purchase of digital currency and precious metals, nothing more, and charges a fee for the service it provides.  All investment decisions are made by iTrust users.  Please read the full Risk Disclosure.