Grayscale (GBTC) 101: World's Largest Bitcoin Fund
Zatrun Published at April 06, 2023

Grayscale Bitcoin Trust (GBTC) is a fund that allows investors to invest in Bitcoin in traditional markets. In this article, you can find all the information you need to know about the fund. wishes you a happy read.

What is Grayscale Bitcoin Trust and How Does It Work?

Grayscale Bitcoin Trust (GBTC) allows investors to invest in Bitcoin through funds that hold large amounts of Bitcoin. It offers various advantages to those who want to invest in Bitcoin. GBTC is a type of fund that started as Bitcoin Investment Trust (BIT) and has been growing ever since. It provides investors with the opportunity to trade directly on the US stock exchange. As of April 2021, GBTC holds 654,885 BTC, representing 46% of the 1.4 million BTC held by public companies.

The asset currently holds the title of the world’s largest Bitcoin fund. Funds like Grayscale Bitcoin Trust allow for Bitcoin trading directly through the stock exchange. However, regulators in the US have not yet fully regulated cryptocurrencies. Therefore, direct buying and selling of cryptocurrencies through exchanges is not allowed.

The project aims to make it easier for investors to invest in cryptocurrencies. Grayscale Bitcoin Trust (GBTC) targets a wealthy investor base to achieve this goal. The project uses its funds to buy Bitcoin and then places these Bitcoins on public exchanges. So, if the BTC price goes up or down, the fund’s value also changes accordingly. Anyone can buy and sell shares by monitoring the GBTC price. The fund is indexed to the Bitcoin price, and investors who participate in the fund can earn returns by selling their shares.

What is the purpose of GBTC funds?

Buying shares in Grayscale Bitcoin Trust (GBTC) is relatively easy, and investors can buy Bitcoin shares through normal brokerage accounts. The traditional structure of GBTC eliminates the need for cryptocurrency tools such as cold and hot wallets and guarantees protection against cyber-attacks. In addition, in late 2019, GBTC was registered with the SEC and became the first crypto investment vehicle to offer transparency, liquidity, and trust. The shares in the fund also make tax reporting easier.

Grayscale Bitcoin Trust charges its customers an annual investment fee of 2%. However, there are companies on the market that offer lower fee rates. In October 2021, Grayscale applied to the SEC for a Bitcoin ETF, but the application was recently rejected.

If the ETF had been approved, the value of GBTC shares would likely have improved. The company has filed a lawsuit against the SEC for rejecting the proposal. Since GBTC is indexed to the Bitcoin price, investing in it is like buying Bitcoin in stock format.

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