Rothschild Investment Corp. is holding more than $1 million worth of Grayscale Bitcoin Trust (GBTC) — but it would’ve made more if it just bought Bitcoin.
According to the fund’s SEC docs, Rothschild got serious about GBTC in mid-2017, when it acquired 11,500 shares for what Protos estimates was $126,000.
But choosing Grayscale over Bitcoin had consequences for Rothschild’s $1 billion portfolio.
We calculated that if Rothschild simply bought Bitcoin each time it invested in GBTC, the fund would have 34.33 BTC today — worth roughly $1.15 million.
That’s 15% worth of potential gains Rothchild missed by opting for Grayscale over Bitcoin.
It gets worse. Investors often pay pretty hefty premiums for Grayscale Trust shares over their underlying cryptocurrencies.
Grayscale’s Bitcoin Trust is no different. In fact, when BTC traded at new highs earlier this month, we estimated Rothschild missed $210,000 in potential profits by holding GBTC instead of Bitcoin.
However, the values of Rothschild’s GBTC stash and its hypothetical Bitcoin were almost identical at the top. It’s only since Bitcoin retreated has the variance become meaningful once more.
While Rothschild likely had the opportunity to avoid the Grayscale premium, retail buyers still seem cool with paying more to dodge the technical hassles that come with storing Bitcoin themselves.
But how long until the rising opportunity cost converts profit-hungry investors from Grayscale to holding crypto directly?