The crypto market may seem like a great place for your money nowadays, as Bitcoin (CCC:BTC-USD) has been surging. But keep in mind that there remains significant volatility and there are more than 2,000 cryptocurrencies to choose from, many of which are marginal. In light of all this, it can be challenging for investors to participate in this dynamic market.
This is why focusing on an ETF-style vehicle makes a lot of sense. This provides for diversification, liquidity and security.
And one of the top operators in the market is Grayscale Investments. Barry Silbert, who was the prior CEO of SecondMarket, founded the company in 2015. He had started investing in cryptos several years earlier. With Grayscale Investments, he has built a platform that offers a myriad of funds for institutional, accredited investors and retail investors. The firm has more than $39 billion under management.
So which ones are available as publicly-traded vehicles? Let’s take a look:
- Grayscale Bitcoin Trust (OTCMKTS:GBTC)
- Grayscale Bitcoin Cash Trust (OTCMKTS:BCHG)
- Grayscale Ethereum Trust (OTCMKTS:ETHE)
- Grayscale Ethereum Classic Trust (OTCMKTS:ETCG)
- Grayscale Litecoin Trust (OTCMKTS:LTCN)
- Grayscale Digital Large Cap Fund (OTCMKTS:GDLC)
- New Grayscale Investment Trusts
Crypto: Grayscale Bitcoin Trust (GBTC)
The Grayscale Bitcoin Investment Trust is the first bitcoin-only publicly traded vehicle, which hit the markets in 2013. And yes, if you purchased the GBTC stock at this time – and held on – your return would have been an astounding 36,842%.
Something else that is notable about this security: In January, it was the first publicly traded crypto stock to become an SEC (Securities and Exchange Commission) reporting company.
For investors who are new to the cryptos market, GBTC stock is probably the best choice. It has the advantage of longevity but bitcoin will also likely remain the dominant asset in the category.
In terms of the expense ratio for GBTC stock, it is 2% and there are $35.8 billion in assets under management.
Grayscale Bitcoin Cash Trust (BCHG)
Bitcoin cash is meant for fast processing of transactions. And if you want to get exposure to this corner of the market, then there is the Grayscale Bitcoin Cash Trust.
Now this is not a direct investment in bitcoin cash. Yet this vehicle will provide a way to track the pricing.
BCHG came on the market in March 2018 and since then the return has been a terrible -61.61%. Although, there was a gain of 140% during the past 12 months. But again, if you want exposure to bitcoin, then GBTC is probably your better bet.
Grayscale Ethereum Trust (ETHE)
Grayscale Ethereum Trust provides a way to track the underlying performance of the Ethereum (CCC:ETH-USD) cryptocurrency. This is among one of the largest digital currencies on the market.
Ethereum got its start about seven years ago. The system was based on a new open source language that allowed for the development of crypto applications. Because of this focus, there has been wide-scale adoption.
A key advantage for Ethereum is its speed compared to Bitcoin. This has made it easier for such things as transactions, say through virtual wallets.
Regarding the ETHE stock, it has an expense ratio of 2.5% and the return for the past 12 months was 1,194.78%.
Crypto: Grayscale Ethereum Classic Trust (ETCG)
Ethereum Classic (CCC:ETC-USD), which you can get exposure with through the Grayscale Ethereum Classic Trust, is a technology platform that provides for smart contracts and decentralized applications. The origins of ETC came about from a fork in the core Ethereum (which happened four years ago).
Note that this crypto is relatively small, with a market capitalization of $1.57 billion. ETH, on the other hand, is at $196.3 billion. Thus, for new investors, this one is probably better to focus on.
The expense ratio for ETCG stock is 3% and the assets under management are $150 million. As for the return for the past year, it was 144%.
Grayscale Litecoin Trust (LTCN)
Litecoin (CCC:LTC) is a crypto that was built for high-speed transactions as well as improved payment confirmations. Note that this asset is based on a different algorithm than Bitcoin.
Recently, Litecoin has been gaining ground. One of the key drivers has been the adoption on the PayPal (NASDAQ:PYPL) platform.
So if you want to invest in Litecoin through the stock market, then the Grayscale Litecoin Trust is a good option. Launched in March 2018, it has an expense ratio of 2.5% and $281.6 million in assets under management. Regarding the return for the past year, it was 391%.
Grayscale Digital Large Cap Fund (GDLC)
With the Grayscale Digital Large Cap Fund, you get diversification across Bitcoin, Ethereum, Bitcoin Cash and Litecoin. These assets actually account for more than 70% of the crypto market.
The strategy for the GDLC fund has worked out quite well. For the past 12 months, it has logged an impressive gain of 757%.
The stock has an expense ratio of 2.5% and the assets under management are $493.7 million.
Crypto: New Grayscale Investment Trusts
In light of the surge in demand for cryptos, it should be no surprise that New Grayscale Investment is launching five new trusts. They are focused on the decentralized finance (DeFi) category, such as with Chainlink (CCC:LINK-USD), Filecoin (CCC:FIL-USD) and Livepeer (CCC:LPT-USD).
These investments are currently available as a subscription for investors who meet certain requirements. Although, it is not clear when these vehicles will start trading.
On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.
