GBTC Barry Silbert’s Bitcoin Trust Is Way Too Overvalued

If you are unfamiliar with GBTC, it is a product that is traded on the stock exchange that theoretically should represent 1/10 of a bitcoin or just .1 btc. However there are stipulations for the fund specifically in order to purchase it directly from Silbert you must be an accredited investor, which entails having a net worth of 1 million + not counting your primary residence or an income of 200k + annually. After a year you are able to sell to the open market and people who don’t qualify for that status can buy on the open market.

Because the original supply is limited to accredited investors and they have to wait a year before they can actually sell anything, the supply is essentially bottlenecked and there is more demand. GBTC is currently trading at around $400 per share which is theoretically a $4,000 bitcoin. I keep saying theoretically, because the fund actually takes management fees in the form of bitcoin, which means one share is actually less than .10 btc, its more like .095 at the moment and only getting smaller over time.

Besides not really doing much and taking fees for it, there are many other ways I think that Silbert’s GBTC fund is a really bad investment long term and I think it is way too overvalued. The main crowd that the fund is primarily marketed for is most likely two camps of people, the first being people who don’t want to worry about managing their bitcoin or worrying about it and the second being people who want to stick it in a retirement fund and not have to worry about capital gains.

Personally though, I think if you have a Roth IRA I would be spending the limited tax free money I have on something more traditional because bitcoin is still a risk. You essentially don’t want to waste the tax free dollars you put in your IRA in the long run. Also there is a real potential that eventually we will get a real bitcoin etf with minimal fees, much lower than Silbert’s which would cause the price of his to plummet and correct to the actual amount of btc he’s offering.

Furthermore I personally just suggest a trezor and buying your coins the traditional way off coinbase, kraken, ect. It is pretty simple. You just send your coins to your trezor wallet which is extremely user friendly and you don’t have to worry about anything. There is no worry about it getting stolen and you can even decentralize the risk by encrypting your seed and leaving it with someone else and you keep the trezor so if either party has their part compromised you can still recover your coins.

I simply just think that people are getting taken advantage of with GBTC and I think long term it is a terrible idea to hold versus just holding regular bitcoin. If you really don’t want to hold regular bitcoin I think better products with lower fees will eventually launch and you can pick those up. Before you know it, GBTC is going to represent under .09 btc and continue to get lower. There is no reason to give your coins away for management when it is as easy as buying a $70 hard wallet and keeping it in a safe, dresser, drawer, ect.