Assets, Bitcoin

Does GBTC Hold Bitcoin?

Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.

Bitcoin is unique in that there are a finite number of them: 21 million.

Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.

As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.

The bitcoin community has since grown exponentially. The number of people using bitcoin has grown steadily over the years, more merchants have started accepting it, and the price of a single bitcoin has risen from $0.

NOTE: WARNING: GBTC does not actually hold any Bitcoin, but instead holds shares of Grayscale Bitcoin Trust. These shares are traded on the stock market and are not the same as owning Bitcoin itself. Investing in GBTC is a very risky venture and should only be done with money you can afford to lose.

10 in 2010 to over $1,000 in 2017.

A company called Grayscale Investments LLC has launched an investment product called the Bitcoin Investment Trust (GBTC), which tracks the price of bitcoin and allows investors to buy and sell shares in the trust. The trust is registered with the Securities and Exchange Commission (SEC) and is currently available to accredited investors only.

The GBTC trust is similar to an exchange-traded fund (ETF), but it is not traded on an exchange like traditional ETFs. Instead, it is traded over-the-counter (OTC) on the OTCQX marketplace, which is operated by OTC Markets Group Inc.

The GBTC trust was designed to make it easier for investors to bet on the price of bitcoin without having to buy and store the actual bitcoins. The trust holds actual bitcoins on behalf of investors and allows them to trade shares in the trust just like they would trade shares in any other company.

The value of a share in the GBTC trust is meant to track the price of a single bitcoin, but it often doesn’t because of fees and other expenses incurred by the trust. For example, when I last checked, one share in the GBTC trust was worth about $10 more than one bitcoin (the price of a single bitcoin was around $2,100 at that time).

So, does GBTC hold Bitcoin? Yes, GBTC does hold Bitcoin within its structure.

3 Related Question Answers Found

Does GBTC Own Bitcoin?

As of late 2017, GBTC was the largest bitcoin ETF by assets under management and the only one available to trade on a major U.S. stock exchange.4 The fund’s objective is for the NAV to track the market price of bitcoin, less fees and expenses. The fund holds actual bitcoins—not futures contracts or other derivatives—and is fully invested in bitcoin.

How Well Does GBTC Track Bitcoin?

Bitcoin is a new kind of asset and, as such, it is not surprising that its price would be volatile. However, the degree to which it has been volatile, and the reasons for that volatility, are not well understood. In particular, there is a common misconception that the price of Bitcoin is primarily driven by speculation.

Can You Redeem GBTC for Bitcoin?

GBTC is a trust that owns Bitcoin and sells shares of that trust to investors. GBTC is thus a vehicle for holding Bitcoin that is tradeable on traditional markets. You can redeem GBTC for Bitcoin, but there may be a premium attached to the redemption depending on market conditions. .
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