Summary Grayscale Bitcoin Trust ETF offers investors exposure to Bitcoin, benefiting from rising crypto adoption and a supportive U.S. regulatory environment. GBTC is the third-largest Bitcoin ETF, holding $21.7B in assets, but faces stiff competition from IBIT and FBTC with lower expense ratios. A key drawback for GBTC is its high 1.5% annual expense ratio, compared to 0.25% for its main rivals, impacting long-term returns. Despite higher fees, the Grayscale Bitcoin Trust ETF has achieved solid NAV returns, and its total returns since inception are leading the performance chart. While GBTC provides solid Bitcoin exposure, I prefer IBIT due to its lower fees, making it a more cost-effective choice for investors. The Grayscale Bitcoin Trust ETF ( GBTC ) is one of the top three largest Bitcoin ( BTC-USD ) ETF investment products that investors can buy if they want to gain exposure to the world’s largest digital asset. Bitcoin broke out to the upside over the weekend and marked the new all-time high at ~$125,700. Further, investor sentiment towards high-risk assets has improved greatly in the last several months, in part because the Federal Reserve is finally lowering interest rates and the U.S. economy seems to be in great shape . The U.S. regulatory environment has decidedly turned pro-crypto with the passing of the GENIUS Act earlier this year, and with cryptocurrency adoption rising broadly, I believe a strong argument could be supplied for owning the world's largest digital currency. I expect to see a series of new all-time highs for Bitcoin in the next several weeks as sentiment has decidedly swung in favor of digital assets. Data by YCharts Previous Rating I have not previously covered the Grayscale Bitcoin Trust ETF, but have evaluated Bitcoin on a standalone basis; for instance, I aggressively recommended Bitcoin in 2021 at a price of ~$36,400. I also covered cryptocurrency marketplaces such as Coinbase Global ( COIN ) -- on which I have a strong buy rating due to accelerating digital asset adoption and high platform profitability. I also covered BlackRock’s iShares Bitcoin Trust ETF ( IBIT ), which is the largest Bitcoin ETF in the world with net assets exceeding $95.0B. One Of Top Three Large-Scale Bitcoin ETFs Benefiting From Crypto's Momentum The Grayscale Bitcoin Trust ETF is the third-largest Bitcoin ETF in the market, with net assets of approximately $21.7B. The iShares Bitcoin Trust ETF ( IBIT ) is the largest fund in the crypto universe with investable assets of ~$95.4B, followed by the Fidelity Wise Origin Bitcoin Fund ( FBTC ), which owned approximately $25.3B worth of Bitcoin investments. As per the Grayscale Bitcoin Trust ETF's latest disclosure, this investment volume translated to the ownership of approximately 176,644 Bitcoins. Data by YCharts Bitcoin is still by far the most significant digital currency in the market, representing approximately 58% of the entire cryptocurrency market. If Bitcoin moves, so does the entire market. Besides high cryptocurrency adoption and name recognition, trading volumes are still overwhelmingly driven by Bitcoin. According to Coinbase Global , one of the largest cryptocurrency marketplaces for retail investors, the platform generates 34% of its total transaction revenue from Bitcoin trading alone. Of the platform's total trading volume, 30% related exclusively to Bitcoin in the second fiscal quarter... which continues to make Bitcoin the main digital asset for investors, in my opinion. Coinbase Global The GENIUS Act was a major milestone achievement for the industry, which not only legitimized the cryptocurrency industry, but also created a stable regulatory framework for so-called stablecoin issuers. Stablecoins are an important pillar of the cryptocurrency market and provides investors with price stability. This, in turn, allows investors to move in and out of more volatile digital assets quickly and at a very low cost, adding to the liquidity of currency trading pairs. The GENIUS Act was passed earlier this year and has led to a major shift in investor sentiment for the cryptocurrency market. With positive momentum in the market, an improving regulatory landscape, as well as a stronger appetite for risk from investors, I believe the investment setup for Bitcoin is generally very strong. Additionally, the Federal Reserve has started to cut federal fund rates by 25 basis points in September to a new range of 4.00-4.25%, which has helped the stock market reach new all-time highs. With investors' risk tolerance rising, I see a strong backdrop for Bitcoin as well. Expense Disadvantage One factor, however, works decidedly against the Grayscale Bitcoin Trust ETF, and this is the ETF's relatively high expense ratio. The GBTC charges investors an annual expense ratio of 1.5%, which compares against expense ratios of 0.25% for both the iShares Bitcoin Trust ETF as well as the Fidelity Wise Origin Bitcoin Fund. Grayscale Bitcoin Trust ETF’s NAV Record, Valuation GBTC has achieved solid returns since its inception: it has booked a solid 65.6% annualized return on its net asset value since inception. The Grayscale Bitcoin Trust ETF was initially started as a private investment vehicle, but converted to a spot Bitcoin Exchange-Traded Fund in January 2024, which is when the ETF began trading on the NYSE. Grayscale Bitcoin Trust ETF The Grayscale Bitcoin Trust ETF has delivered a total return of 165.6% since inception, which means the GBTC ranks at the top of the performance chart for the top three Bitcoin ETFs in the market. Data by YCharts Risks With GBTC The single biggest risk for the Grayscale Bitcoin Trust ETF is that the ETF is focused exclusively on Bitcoin and ignores all other digital assets, including Ethereum ( ETH-USD ). A fundamental disadvantage of GBTC, as well as all other exchange-traded funds charging fees for owning digital currencies, is that investors can simply buy Bitcoin outright on a cryptocurrency exchange with minimal fees, such as Binance. What would change my mind about Bitcoin (and GBTC) is if the digital currency were to lose market influence or if trading volumes shifted towards lower-ranked cryptocurrencies, such as Ethereum. Final Thoughts In my opinion, the Grayscale Bitcoin Trust ETF is a solid investment choice for investors that want to gain directional exposure to the world’s largest cryptocurrency: Bitcoin is still the number one digital asset globally and still dominates the cryptocurrency sector with a market share of 58%. However, investors should keep in mind that the Grayscale Bitcoin Trust ETF has a fairly high expense ratio on a comparative basis. I like that Bitcoin adoption is growing and that the GENIUS Act is creating a favorable, pro-cryptocurrency regulatory environment... which should continue to benefit investor sentiment. I expect Bitcoin to reach new all-time highs in the weeks and months ahead and see the Grayscale Bitcoin Trust ETF as a solid investment vehicle to generate attractive capital returns for investors with a very high-risk tolerance.
