How To Get Exposure To Bitcoin In Your Brokerage Or Retirement Account... At A DISCOUNT

Title isn't even clickbait. It's literally on sale.

Hello Decentralized Way subscribers!

We’ve got a lot of content headed your way soon, but before an article about where BTC may be headed hits your inbox tonight, I wanted to blast out and elaborate on a tweet I sent out yesterday - Because you need to see it.

I’ve had a number of friends and family ask about Bitcoin, but some are hesitant to buy it because it’s “difficult” or “clunky” or “scary” or any number of things. Maybe they don’t fully understand it (and we’ll talk more about this later on), or maybe they just are hesitant to move money into something that they can’t touch.

Or maybe they’re hesitant to move money outside of their brokerage account and into something new?

If that’s you, then this is for you.

Disclaimer: This is not financial advice, or an inducement to make a particular investment or follow a particular strategy. This is for informational purposes only.

So if you understand that tweet above, great, you’re ahead of the game. Go get some GBTC.

If you don’t, this next section is for you.

First, a Little Background…

Yesterday, ticker $BITO started trading on the New York Stock Exchange. The first of its kind, BITO is a Bitcoin Futures ETF.

On day 1 of trading, over $1 billion dollars of volume was traded. Wow. Think traditional markets have been waiting to get their hands on some BTC exposure or what?

It’s important to note that BITO is a futures ETF, meaning it trades futures contracts… Rather than a spot ETF, which would actually own the underlying asset, Bitcoin.

With that out of the way, let’s talk GBTC.

What is GBTC?

Grayscale Investments is the world’s largest digital currency asset manager with more than $38 Billion in assets under management as of September 30, 2021.

They offer GBTC, or Grayscale Bitcoin Trust as vehicle allowing individuals to trade shares in trusts that hold pools of Bitcoin - 654,600 BTC to be exact, representing 3.117% of the total supply of all Bitcoin. Source.

To be transparent, GBTC does charge a relatively high management fee of 2%. I expect this number to fall soon as more competition in the Bitcoin ETF space pushes it down.

Speaking of Bitcoin ETF’s, Grayscale just filed (on Monday) to turn GBTC into an ETF. The process will likely take months, but it’s a great step in the right direction towards a spot ETF.

In my personal opinion, owning GBTC is not as “good” as owning Bitcoin itself, but of course it isn’t. Would you rather own the horse or the reflection of the horse in the mirror?

With that being said, it’s the next best way to get exposure to Bitcoin without owning it.

It’s Priced Below Market Value - Seriously

When I tweeted that yesterday (and bought more myself at the same time), GBTC was trading at $45.65. Today, on the back of a big Bitcoin move (new all time high!) it is now trading at $52.05 as of writing this sentence, a 14% move in a single day.

However, even at $52.05, it is still trading at a discount. Here’s why.

Grayscale actually calculates the price GBTC should be trading at on their website. Source. Check it out below.

You’ll see the holdings/share number on the right. Meaning, based on how much Bitcoin they own, divided by the number of shares outstanding, what should the stock be priced at?

Funnily enough, it’s trading at less than it is valued at, representing a golden arbitrage opportunity. Or in other words, a golden opportunity to make money.

It’s not trading at a 25.8% discount like it was yesterday, but it’s still trading at about an 11% discount. That’s not bad at all.

Even if you’re unsure about Bitcoin or have some other hold up, you can’t argue that there’s money to be made here.

So what are you waiting for?

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Thank you for reading! If you enjoyed, please consider subscribing to the Decentralized Way (it’s free!). Or find me on Twitter @decentralizedJ