Get Your Diamond Hands Ready

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StartEngine was the largest equity crowdfunding platform in the US in 2021 in terms of funds raised.

They say a cat has nine lives. 

But how about securities?

Bitcoin has been on the brink of death several times over the years, but has managed to come back. 

From 2013 – 2015, BTC moved from $1,127 down to $200. In 2017-2018, BTC went from $19,423 down to $3,217. 

Currently, bitcoin has gone from $69,000 to the $20,000 level.

Is now the time to buy the dip?

Grayscale Bitcoin Trust (GBTC) is on of the most well known Bitcoin ETF for investing in the cryptocurrency.

It was the first to offer everyday investors a way to indirectly own bitcoins through the stock exchange. That made it easier for folks who weren’t interested in learning about or opening a digital wallet.

But since then, other competitors have popped up, the most popular of which is ProShares Bitcoin Strategy ETF (BITO).

However, despite the higher search volume for BITO amongst financial pros, we thought it best to start with the pioneer.

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Grayscale Bitcoin Trust (GBTC)

GBTC seeks to track the investment results of the CoinDesk Bitcoin Price Index (XBX). 

Its sole investment is bitcoin (BTC). GBTC gives investors exposure to BTC in the form of a security, which is beneficial to a lot of people who don’t want to deal with buying, storing, and safekeeping BTC directly. 

The Trust’s BTC is stored offline or in “cold” storage with Coinbase Custody Trust Company. Cryptocurrency traders will often tell you the safest place to keep your coins isn’t through a “hot” wallet or exchange, where it is vulnerable to hacks and theft, but via “cold” storage. 

GBTC has over 638,970 bitcoin, with assets under management at approximately $13.8 billion. 

Since its inception, GBTC has returned a whopping 14,135.71%

In other words, $10,000 invested less than 10 years ago is now worth $1.4 million!

Although GBTC primarily holds BTC, they do not have a 100% direct correlation. 

In fact, GBTC has underperformed BTC. And it trades at a discount to NAV. 

Furthermore, holding BTC carries cybersecurity risk. And GBTC doesn’t come without a cost. Shareholders are charged an annual fee of 2%. 

And while we live largely in a commission-free world, some brokers still charge their customers for over-the-counter OTC tickers. And that’s where GBTC trades, on the over-the-counter (OTC) markets. 

Investing In GBTC

Despite trading on the OTC Markets, GBTC sees decent volume. On average, we’ll see about 5.6 million shares traded daily. 

At $13 and change, GBTC is a volatile security. It has an average-true-range (ATR) of $0.44 or around 3.4%. 

Despite the positive returns it had delivered, GBTC should be considered a risky investment. After all, it is down more than 60% YTD while the S&P 500 ETF (SPY) is down 23% YTD. 

However, it hasn’t stopped large financial institutions from jumping into GBTC.  

As well as, mutual funds:

Besides BTC and GBTC, investors have other options in terms of gaining bitcoin exposure. 

For example, the Bitcoin Strategy ETF (BITO) is an exchange-traded fund that invests in bitcoin futures. And while that is an option, it does not invest directly in bitcoin, which may be a turn-off to some investors. 

Plus, ETFs that trade in futures contracts see their value erode over time due to contract rolls.

Our Opinion – 7/10

Bitcoin and cryptocurrencies remain a mystery to most of the investing public. After all, overall adoption globally remains low. 

However, if you were to compare it to anything from the past, the dot.com era might be the most accurate. You see, while everyone believes that crypto and Web3 will change the world, the same way they thought the internet would, we’re still unsure of which companies will emerge as the winners. 

Bitcoin remains the most valuable cryptocurrency, and although volatile, it has the best chance to stick around in our opinion. 

GBTC has been around since 2013, and it remains a top option for investors who want BTC exposure. 

From 2013 – 2015, BTC moved from $1,127 down to $200. In 2017-2018, BTC went from $19,423 down to $3,217. 

Currently, bitcoin has gone from $69,000 to the low $20,000 mark. 

Buying the dip after massive corrections have proved to be profitable. And we believe this is one of those opportunities here. 

That’s why we like GBTC long for the next 12 to 24 months.