Grayscale News

Hi Friends,

As a shareholder in Grayscale's Bitcoin Trust, I received email communication from them recently that they intend to convert the Trust to an Exchange Traded Fund (ETF). Given this is one of my watched securities on my phone, it fed me this headline:

GBTC is the ticker for Grayscale Bitcoin Trust. The news is not really big news but it does help - GBTC is already tradable, but now will be able to get a better exchange listing and also more exposure as an official ETF.

I have been invested in GBTC for a while, and there has been an erosion of the premium, so getting listed as an ETF should make it more closely mirror the underlying net assets, causing the discount or premium to the net assets to be less of a factor. Most investors like me have had to buy at a premium to the NAV - somewhere to the tune of 10-30%, so the fact that the fund is actually under the NAV right now has not been good and converting to an ETF almost seems like a nail in the coffin to the premium paid - you will not be getting that back.

Of course, buying indirect exposure to BTC through this vehicle or an ETF carries a risk - you do not hold the Bitcoin yourself. There are also fund expenses and management fees that will be paid inside the fund, so there is a compounding erosion of performance compared to holding the Bitcoin directly.

I confess that it is hard to beat the convenience of indirect ownership of Bitcoin through your brokerage account through a product like GBTC and future ETFs, which is appealing to me and almost feels like insurance to holding it directly. You also still have risks when you hold directly - some initial ones that come to mind are that you could lose the keys to your exchange wallet, your external ledger drive could get stolen, if you die it will be hard for your heirs to figure out that you have it/how to access it, etc.

Pros and cons for sure - all that to say, if you wanted to buy Bitcoin through your brokerage account, you could already do that, so the news of an impending ETF is not that significant to me.

What are your thoughts?

Thanks for coming by, Brian

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