Thread by @alphaazeta

I've been meaning to write some thoughts about @grayscaleinvest $GBTC for a while.

Buying $GBTC vs #Bitcoin is not an obvious decision. It depends a lot on your tax situation + familiarity with tech.

This is not tax or financial advice. But a few thoughts below.

$GBTC:
- 2% annual fee (argh!)
- 18% premium to BTC
- If placed in IRA, accrues Tax Free
- Not your keys, Fraud risk
- Commission Free on many platforms
- Easy execution

#BTC:
- No annual fee
- No premium
- Potential for capital gains tax (assume 15% for now)
- Your keys (Big one)
- Exchange commissions + bid/ask spread - between 1% and 3% (avg)

Important: I know you can place BTC in an IRA. I haven't looked into that in detail. Worth exploring. But it's hard to beat the convenience of buying an asset inside a brokerage account.

For many new users, just telling them to buy $GBTC is the best route. Simple and easy.

Is it worth it?
That depends...
Let's look into some numbers.
Assumptions below

With the above assumptions, $GBTC would have better after tax returns after 10yrs. But the returns are highly dependent on the assumptions. Also, if we assume that the premium to $BTC drops to zero, this outperformance is pretty much none.

I know this is controversial. I know many will say, not your keys, ... But I have preferred to tell new users to just buy GBTC. Get them engaged, learning. Then teach how to use a hardware wallet and get some real Bitcoin. Has worked well with most ~one year education process.

In conclusion: I would favor holding 100% of positions as #Bitcoin. But given the ease of execution, tax deferral and the fact that many already have an IRA setup, ready to purchase, a partial allocation (or initial) to $GBTC is highly justifiable and a great stepping stone.