It’s reasonable if you’re searching for some skin in the game, with Bitcoin (BTC) approaching all-time highs and the first crypto ETF hitting the market on Tuesday. Of course, the bitcoin market is dangerous. Volatility is a two-edged sword. In the stock market, investors can’t rely on traditional valuation criteria like they can in the stock market.
Buying Bitcoin and other emerging digital currencies at a bargain is one strategy. It’s not ideal — and I’ll point out the flaws — but it’s something to think about if you want to get more bang for your risky buck. It all comes down to Grayscale Investments’ publicly traded trusts, which have been in operation since 2013 and provide investors with convenient access to numerous cryptocurrencies.
It’s all About Trust – Crypto Bull Run Is Back
On Tuesday, the crypto market welcomed the first Bitcoin ETF, but the fund does not actually hold the cryptocurrency. The ProShares Bitcoin Strategy ETF owns Bitcoin futures and exchanges them for new futures when they mature. Grayscale Bitcoin Trust (GBTC), Grayscale Ethereum Trust (ETHE), and Grayscale Ethereum Classic Trust (ETCG) are all cryptocurrency trusts.
The Grayscale trusts are permitted to own crypto within the present legislative system, which permits them to trade on public exchanges as SEC reporting corporations. They trade more like closed-end funds, swinging to premiums or discounts to their net asset value. They operate as trusts, and while investors often confuse them with ETFs, they trade more like closed-end funds (NAV). All three are currently trading at substantial discounts on their underlying investments.
For crypto investors, Grayscale Bitcoin Trust is a household name. It manages $40.5 billion in cold-stored Bitcoin and is the largest publicly traded cryptocurrency vehicle. Even Cathie Wood’s ARK Invest is a big player, with some of her ETFs getting direct Bitcoin exposure via a stock exchange-listed vehicle.
Grayscale Ethereum Trust is the company’s second-largest trust, with $11.9 billion in assets under management. Etherum is the world’s second-largest cryptocurrency, with strengths in blockchain and smart contracts. The trust now trades at a lower discount, but until this summer, it was regularly fetching a market premium to its Ethereum.