Cathie Wood Bought the Grayscale Bitcoin Trust. Should You?
The Grayscale Bitcoin Trust (OTC: GBTC) has become a regular in headlines over the last few weeks. The Trust recently hit a new record low discount compared to the price of Bitcoin (CRYPTO: BTC) as a result of contagion stemming from one of the largest crypto exchanges, FTX, declaring bankruptcy.
With GBTC trading at a discount, investors might be looking at that as an opportunity. Famous investor Cathie Wood did. Her firm, Ark Invest, recently bought another $1.4 million to bring its total number of shares up to a whopping 6.357 million shares. But before deciding if you should follow Wood's investing strategy, it can be helpful to understand just how the Trust works and how it differs from owning Bitcoin itself.
The Grayscale Bitcoin Trust was created in 2013 and is designed for investors who want exposure to Bitcoin without having to actually own the asset. Investors buy shares of the Trust on the stock market, and Grayscale holds the actual Bitcoin. Knowing that the Grayscale Bitcoin Trust owns the Bitcoin is important, but to truly understand why the Trust is trading at a discount, you need to understand the dichotomy between a trust and an exchange-traded fund (ETF).
Source Fool.com
