In the previous post of the “How to invest in Bitcoin profitably” series, I explained how indirect investments in Bitcoin would work. Though the methods described can be heralded as safe or risk averse, the returns are substantially small and are incurred over longer durations. But part 1 explained methods that are pretty risky if the market gets volatile. So people more often ask me a smart way of investing in the cryptocurrency where either the risk is not too high but the returns are substantial or a way that gives them additional benefits apart from the profits for the kind of risk they are incurring. Well there are a couple of ways and that is what this final post in the series of bitcoin investment posts is about. Let’s look into those methods:
Bitcoin Investment Trust’s GBTC:
‘Bitcoin Investment Trust’ was launched in 2013 by Barry Silbert, is an open ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables accredited investors, with annual incomes greater than $200,000 or assets of more than $1 million, to gain exposure to the price movement of bitcoin for a minimum investment of $25,000 without the challenges of buying and securely storing bitcoin. The price of GBTC shares roughly account for 10% of Bitcoin price and hence people wouldn’t be directly exposed to the risk of Bitcoin. It also gives you additional tax benefits apart from the reduced exposure.
Bitcoin Investment Retirement Account:
While GBTC holds good promise, it is available only for accredited investors. The other instrument which is the most common one, that also provides tax benefits along with good return on investments in Bitcoin would be Bitcoin IRA. Bitcoin IRA allows users of any scale to invest directly in Bitcoin and hence directly apes investments in real time Bitcoin markets. The customers hold the Bitcoin directly where Kingdom Trust acts as the custodian and BitGo secures the cryptocurrency. The firm uses Genesis Trading to purchase Bitcoin and has an annual contribution limit of $5000.
Due to GBTC’s limited availability, Bitcoin IRA proves to be the better option with good amount of returns aggregated over a period of time. It would also provide tax benefits and good exposure to Bitcoin markets.