04.05.2024

Have you always wondered what gbtc now. actually is you're in luck because in. this video we will take a deep dive in a. grayscale bit going Trust hello I'm. Adrienne for Bitcoin for beginners the. educational channel about all things. Bitcoin and cryptocurrency in short and. sweet fashion as you may have noticed in. the last couple of years. everyone in crypto is waiting very. anxiously for the Bitcoin ETF to be. approved this is because many believe. and hope this will lead to institutional. money to enter into Bitcoin on a massive. scale so that the price will rise. astronomically and we can all buy Lambos. however there is already an investment. vehicle available on a traditional. financial market it's called gbtc the. first and only u.s. Bitcoin investment. fund today we will talk about gbtc and. search for answers to these questions.

What is G BTC how does it work. what is the G BTC premium and how. traders use it reasons to buy or not to. buy gbtc SG BTC helping to get. institutional money into Bitcoin and its. gbtc useful for the average investor of. course as always this presentation is. not financial advice. it is only educational content and. personal opinion please pause the video. to read our full disclaimer first what. is G BTC gbtc is the ticker symbol of. the grayscale bitcoin trust the first. and only u.s. investment fund with. Bitcoin as its underlying value and was. launched in 2013 already encoded on the. overthe-counter market OTC GX. since 2015 it is a passive investment. fund because its portfolio is strictly. Bitcoin in a portfolio composition won't. be adjusted so there is no need for. active fund management's greyscale is an.

Investment company that is launching. more investment products such as. investment funds similar to gbtc that. investing out Cowen's there is a fund. for coins like ether litecoin and even. bitcoin cash also they have recently. launched a crypto index fund that. consists of several of the largest. cryptocurrencies and will be rebalanced. each quarter for the time being this. product is only available for accredited. investors. grayscale is part of the digital. currency group and its founder and CEO. is very Silbert gbtc has currently. roughly 245 million shares outstanding. and each share represents almost one. thousandth of a Bitcoin which means with. about 1025 shares you own the equivalent. of one BTC the assets under management. are worth 2.5 billion at this moment and. that equals about two hundred thirty. nine thousand Bitcoin which is 1.3.

Percent of all Bitcoin in circulation. and that makes gbtc itself. one of the biggest whales out in the. ocean the Bitcoin that gbtc has under. management is in cold storage offline at. Cohen Base as the custodian coinbase. falls on a proper regulation to act as a. custodian to certify that gbtc has the. assets that it claims it undergoes. regular audits for its services gbtc. charges a fee of two percent annually. which is deducted from the Bitcoin it. has in storage the amount of Bitcoin per. share therefore decreases over time. accredited investors are regularly able. to buy gbtc shares directly from. greyscale. for which they purchased Bitcoin in a. market and issue new shares to deliver. to the investor. therefore the amount of shares and the. total assets under management can. increase at times that greyscale opens.

Up for share creation however a. redemption of shares is not possible at. great scale the shares can only be sold. in the markets before I continue if you. find this video interesting please give. it a like to support our channel if you. want to be updated of our latest. material subscribe and hit the. notification bail because share creation. is not always possible and redemption is. never possible here lies an important. distinction between gbtc and how a. future Bitcoin ETF would look like. because a Bitcoin ETF does allow. continuous share creation and redemption. arbitrage encourages that the market. price per ETF share is relatively close. to the market value of the underlying. assets per share this means that per $1. spent on an ETF in the market he will. receive close to $1 in underlying value. of the ETF because of the structure of.

The gbtc investment fund the price. difference between a market price and. the value of the underlying chemita and. vary at various times from a certain. perspective this makes investing in gbtc. slightly more complex then. just buying spot bit going or even in a. theoretical ETF so how does this price. difference look like the underlying. value of Bitcoin per shared gbtc maybe. only ten dollars 30 the native asset. value while on the market you need to. pay for the share $13 this price. difference is what is called the premium. in a formula it looks like this the. native asset value plus the premium is. the gbtc market price so if you want to. know how much the premium is on gbtc you. need to calculate premium as market. price minus native asset value in this. chart black is the Bitcoin holding per. share the native asset value and green.

The actual market price the difference. between the two is the premium and as. you can see sometimes the difference is. larger and sometimes the premium is. smaller this means for those that can. only invest in bid going through gbtc it. is important to check the current. premium of gbtc before buying because. the premium can fluctuate a lot and it. technically means you can be overpaying. a lot for the gbtc share a high premium. often occurs when there is high demand. for Bitcoin and consequently so high. demand for gbtc shares that there are. not enough shares available to. accommodate the demand which leads to a. much higher price of gbtc then the. native asset value would justify when. the price of Bitcoin is falling usually. the premium will also be much smaller. because the demand for gbtc will. consequently be lower too at the.

Alltime high of BTC in 2017 the premium. of gbtc was around 100% of the value of. Bitcoin which means that at an all time. high price of around $90,000 gbtc share. buyers were actually paying 38 thousand. for the equivalent of one BTC generally. it means that the price of gbtc moves in. an accelerated fashion up or down. compared to BTC due to the premium. timing and the premium are therefore. very important to consider for gbtc. investors as an extra factor compared to. simple spot buying some traders. investors use specialized arbitrage. strategies to benefit from the. differences in premium the gbtc premium. is also often used as an indicator for. BTC which very generally looks like this. if the premium is increasing it's a. bullish signal or the price is becoming. overbought if the. is decreasing it's a very signal or BTC.

Is becoming oversold an important. general recommendation is if you don't. understand the concept mechanics and. role of the premium of gbtc it is why. certain not to be buying gbtc or the. other great skill trusts what are the. reasons to buy gbtc why not just buy BTC. directly some investors are not. interested at all in being a Bitcoin. user or about the philosophy of. censorship free permissionless global. currency they only want to speculate on. the Bitcoin price without the hassle and. risk of understanding and having to deal. with wallets crypto exchanges security. issues public and private key protection. hot storage cold storage hackers etc. they just want to speculate in price. movements in a convenience of the. regulated traditional finance. environment of the broker or institution. also for many institutional investors.

Exposure to Bitcoin directly is. currently impossible so basically their. only alternative is gbtc some retail. investors might have access to gbtc. through their IRA or 401k which might. give them extra tax benefits from. investing in gbtc instead of investing. in BTC directly disadvantages of gbtc. offer spot BTC might be when you hold. gbtc shares it is not a directly. ownership of Bitcoin after all gbtc. controls the private keys and as you. know not your keys not your Bitcoin the. shares also don't give you voting rights. nor can you redeem the shares for real. Bitcoin you can only sell the shares for. fields in the open market it also means. you don't have bitcoins special. properties of modular censorship. resistant payment network you won't be. able to actually use the Bitcoin for its. intended purpose of digital currency and.

Technically your shares can be seized or. confiscated or transactions can be. censored you need to trust greyscale as. a third party to hold your Bitcoin so. there is an additional layer of third. party risk if greyscale goes bankrupt. for example you may lose your. investments this is an extra risk on top. of the risk that exposure to Bitcoin. already inherently has of course the. other side is that you can trade gbtc. shares in a fully regulated environment. of a broker or provider which gives. extra investor protection as well the. premium can cause an additional risk. factor and has to be taken into accounts. furthermore trading hours are restricted. to opening hours of the trade. new markets while SWAT PTC can be traded. 24/7 this means that you can't buy or. sell your gbtc shares to take. opportunities or limit your risk.

Exposure when BTC makes giant moves. during the weekend or at night in. bitcoins best year 2017 when it reached. its most recent alltime high most of. that was caused by speculation on the. crypto spot markets by mostly fomo of. retail investors futures hadn't been. launched yet until end of December that. year and the only other alternative for. institutional money was grayscale which. collected only 25 million that year. including gbtc and the other investment. products which isn't quite exciting. compared to the exuberance of 2017. however during 2018 despite the severe. bear market a dramatic shift was visible. for gbtc with an enormous inflow of. money to the amount of 242 million that. was accounted for Bitcoin by grade scale. nearly ten times as much as in bullish. 2017 according to grayscale 66% of that.

Money came from institutional investors. so that is quite a significant increase. of institutional money since that year a. clear disadvantage of gbtc compared to a. potential ETF though is that gbtc is. listed on the OTC markets while an SEC. approved ETF would eventually be. exchangetraded which means even more. liquidity and accessibility to Bitcoin. for institutions than gbtc can offer in. the OTC markets perhaps in a future. video about ETFs we can explain more. about that other endeavors by great. scale to increase gbtc market share or. its share splits due to the strong. increase of the Bitcoin price in recent. years the value and price of gbtc had. increased to between thousand to two. thousand US dollar per single share this. made it less accessible for smaller. investors such as retirement accounts to.

Buy appropriate amount of gbtc also due. to the decrease of the amount of Bitcoin. per share due to the annual 2% fee. comparing between the market price of. gbtc its native asset value per share. and the actual Bitcoin price was not. intuitive any longer in 2018 greyscale. introduced a 91 to 1 share split which. means for each old gbtc. sure Aldus got 91 new shares but the. amount of Bitcoin per new share was then. divided by 91 this way with the native. asset value of currently around 10:30. and a Bitcoin price of roughly ten. thousand six hundreds an investor can. now more intuitively estimates the. native asset value of gbtc based on. bitcoins price also the lower price per. share makes it more accessible to a. larger group of retail investors for. example retirement accounts which. hopefully leads to an increase of demand.

And liquidity of the fund another recent. activity to increase the demand for the. trust was a large marketing campaign. called hashtag drop goals it was. designed and targeted to promote great. skills products such as gbtc to. specifically gold investors the campaign. was launched earlier this year and still. ongoing the gold market is a multi. trillion market and becoming still only. less than 200 million the initiative was. meant as a way to persuade gold. investors to partly or completely switch. their gold allocations into Bitcoin via. gbtc for gold investors perspective gold. is a mature market with limited upside. due to its already gigantic size while. the Bitcoin market still is tiny and as. much upside left to grow before maturing. also earlier this year gold was still. performing quite poorly while Bitcoin.

Was already having a bull rally. institutional money since 2018 is. clearly finding its way into Bitcoin. despite or in fact because of the bear. markets how interesting is gbtc as. investment for investors inside the. crypto space most are actually better. off holding their own Bitcoin directly. they have full control of their Bitcoin. after all your keys your Bitcoin they. can avoid the 2% and your fee also its. influence is growing so long as the etf. is still not approved and gbts assets. under management are already 1.3 percent. of the circulating supply if an ETF does. get finally approved it is not unlikely. that a lot of demand and attention will. shift away from gbtc to a new etf by the. way if you want to learn more about. Bitcoin ETFs you can watch our other. video etf's explained for dummies that. is displayed in the video suggestions.

here for now this is it for today I hope. you learned a new thing or two about. gbtc. as a channel is all about education hope. to see you soon on the next one stay up. to date by subscribing to our channel. for all our new material have a great. rest of your day