GBTC vs Bitcoin: 7 Main Differences

Investing in Bitcoin (BTC) or Grayscale Bitcoin Trust (GBTC) are currently the two of the easiest ways to purchase Bitcoin for the future.

The SEC finally approved the first Bitcoin ETF when Proshares Bitcoin Futures ETF offered another alternative for Bitcoin investors. Grayscale also wants to convert its Bitcoin trust into a spot ETF to gain more exposure but unfortunately the SEC rejected Grayscale’s Bitcoin spot ETF application in July 2022.

These are the only ways to gain Bitcoin exposure unless you purchase Bitcoin stocks that hold BTC on its balance sheet.

If you’re new to Bitcoin then you’re probably wondering which one is the better investment. I personally hold both BTC and GBTC so I can help answer this question with first-hand experience.

In this article, I’ll describe both investments to help you determine which investment is the best for you.

What is Bitcoin (BTC)?

Bitcoin is a cryptocurrency that trades 24/7 365 on the blockchain as a decentralized network powered by miners. You can buy and sell BTC at any time regardless of where you live in the world.

Investing in pure BTC provides the greatest long-term returns but also carries extra risk. You are subject to the risk of hackers or scammers stealing your Bitcoin. You may store BTC in a hardware wallet and forget your private keys (you will no longer be able to access your coins).

However, you won’t have to pay any fees by holding your BTC long-term. You own 100% control of your Bitcoin and can easily sell it in case of emergencies.

What is Grayscale Bitcoin Trust (GBTC)?

Grayscale is the largest digital asset management firm in the world and their flagship product, Grayscale Bitcoin Trust, holds the most BTC out of any publicly listed firm.

GBTC is a publicly-traded trust that grants shareholders access to underlying Bitcoin which is held in the trust. GBTC is not a mutual fund, closed-end fund, ETF, or stock.

GBTC trades on the OTC markets and charges a 2% management fee like most managed trusts. It’s becoming an extremely popular holding in IRAs because you can easily purchase GBTC shares through an OTC-supported broker like Fidelity or eTrade.


  • Easily invest in BTC gains through your IRA, Roth IRA, or SEP IRA account
  • Trade big movements in Bitcoin’s price on a commission free broker and avoid crypto trading fees
  • More protection against hackers and scammers by paying Grayscale to store your BTC instead of storing your BTC privately
  • Gain Bitcoin exposure in your child’s 529 College Savings or UTMA without setting up a private wallet for your kid (most companies like Coinbase and Robinhood have a 18+ age requirement)
  • Tax-free withdrawals on any GBTC held in your Roth IRA


  • 2% management fee that reduces your overall returns over time
  • You never own full custody of your BTC and there is a possibility that Grayscale suffers a potential Bitcoin hack
  • Can only trade GBTC shares during OTC market hours from 6AM EST to 5pm Monday through Friday
  • Must pay taxes on GBTC withdrawals in your SEP IRA

Is There a Correlation Between GBTC and Bitcoin?

Yes but this correlation is currently out of whack due to GBTC’s closed fund status. Right now, GBTC trades at a 30% discount to its underlying Bitcoin holdings.

Grayscale would eliminate this premium if the SEC allows them to convert GBTC from a Bitcoin trust into a spot ETF.

A Simple Bitcoin Accumulation Strategy for Beginners

Both BTC and GBTC have a role in my long-term financial plan. I hold BTC in cold storage plus own GBTC shares in my SEP-IRA and my kid’s UTMA.

I’m not happy about paying taxes on my GBTC in my SEP IRA in the future but I’m benefiting from tax-deferred deposits up to $58,000 every year.

If you work a regular job then you can buy GBTC in your Roth IRA and retire off Bitcoin gains tax-free after you’re 59 1/2.

Most Bitcoin bulls hold some BTC in cold storage and GBTC shares in their retirement account. This is a wonderful strategy to reduce your overall risk yet benefit from exponential Bitcoin returns in the future.

Where to Buy BTC & GBTC

I purchase BTC using Coinbase safely and securely. You can open an account and purchase Bitcoin using a credit card, bank account, wire transfer, or Paypal. Read my honest Coinbase review to learn more about my favorite cryptocurrency exchange.

GBTC is an OTC trust equity so you need to buy it from a full-service brokerage like Fidelity, eTrade, Schwab, or TD Ameritrade.


BTC and GBTC both have great benefits and great risks. There is no right or wrong answer to which is better. Do your own research and figure out which asset you like the best.

I enjoy holding BTC but also appreciate the flexibility and safety of GBTC. Both investment vehicles are a big part of my long-term Bitcoin DCA strategy.

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