What is a Bitcoin Investment Trust (GBTC)?

The Bitcoin Investment Trust ( GBTC) is the only choice for investors to trade Bitcoin on the stock market, and for this investors tend to pay a premium. Below we explain the Bitcoin Investment Trust (GBTC), the pros and cons of GBTC, and why GBTC is a better investment than Bitcoin in some ways (but not in others). What is a trust?

How does GBTC work?

GBTC offers a way to invest indirectly in Bitcoin through an OTC trust vehicle that tracks the price of Bitcoin. Owning Bitcoin directly means you actually own the individual tokens. You can use bitcoins for transactions or hold onto them as an investment, storing them in your digital wallet.

Is GBTC a good stock to buy?

GBTC is the only Bitcoin stock on the market. The second there is an alternative, GBTC is likely to see its price drop (if there were more Bitcoin products, one could assume that GBTC would lose some of its premium; that poses a risk for GBTC investors). GBTC trading tends to be more emotion-driven than the already volatile Bitcoin.

What does GBTC premium mean?

GBTC’s price to NAV can get a little absurd at times. The GBTC premium works as an indicator of crypto sentiment at least, if not price direction. In early September 2017, before GBTC shares split 91-1, Bitcoin traded at about $4.5k and GBTC $1k for the rough equivalent of 1 BTC. That means GBTC was trading at over 100% premium.