Grayscale Bitcoin Trust ETF: Buy It, Just Not Now

Summary Grayscale Bitcoin Trust ETF closely tracks Bitcoin, offering exposure and mirroring the cryptocurrency's volatility and sentiment-driven price swings. GBTC's price action is best approached with a disciplined trading strategy, not a buy-and-hold mentality, due to its sentiment-driven nature. A simple moving average strategy historically outperformed buy-and-hold, reducing drawdowns and volatility while capturing most upside. Current signals suggest staying out of GBTC until Bitcoin regains strong market support, likely above $95,000 for a sustained period. As I watch Bitcoin lose another $2,000 worth of market value, further solidifying its 40%-plus pullback from peak levels that is the worst retreat since late 2023, when one coin was barely worth $30,000, I decided to write about the Grayscale Bitcoin Trust ETF ( GBTC ) for the first time ever. My decision was further supported by a few early calls for the bottom of the bear market, which I respectfully (fine, maybe laughably) find premature. I chose GBTC because the ETF closely tracks the performance of Bitcoin itself (see chart below), although I understand that bullish and bearish periods have produced premiums and discounts, respectively, of the ETF share price relative to the price of the cryptocurrency. Regardless, this article is as relevant for GBTC as it is for Bitcoin itself. Data by YCharts A quick word on GBTC GBTC was one of the first regulated instruments to provide exposure to the movements in Bitcoin price, having launched in 2013. Back then, GBTC was technically a private trust, but it became a spot ETP in 2024. Today, the sole asset of the fund is Bitcoin . The instrument is very liquid, trading an average of nearly 6 million shares per day and having a bid-ask spread of only about a penny. On the downside, a management fee of 1.5% is quite hefty. Relative to some of its larger peers, like the ProShares Bitcoin ETF ( BITO ) and the iShares Bitcoin Trust ETF ( IBIT ), the fee is a solid 100-125 bps higher than what investors should expect to see for Bitcoin funds in the market. Also worth noting, the fund often trades at a premium or discount to NAV, sometimes above 0.05%, as the chart below illustrates, creating a bit of tracking error. That said, I believe that these deviations to NAV are of minimal concern other than during times of market distress—which, as I will discuss below, tend to be moments when I would generally be divested of GBTC anyway. Grayscale The fundamentals of Bitcoin I debated writing this section, and I almost didn't. As a plan B, I considered writing "blah, blah, blah", but I did not think that Seeking Alpha's editorial team would feel comfortable publishing it. In reality, the fundamentals of Bitcoin are not so relevant for this discussion, in my view, for two reasons: (1) most, if not all, Seeking Alpha readers browsing the GBTC page probably know what the Bitcoin bull case is all about; and (2) as we will see later, the bar that needs to be cleared for an investor to trade Bitcoin as I believe they should is quite low—i.e., little does it matter if or when Bitcoin becomes the new gold. To the first point above, I should quickly reiterate that investing in Bitcoin might make sense due to one or a combination of the following: The potential to be the currency of choice in global commerce and other applications Decentralization and lack of meaningful gatekeepers Strong institutional adoption Diversification benefits within a balanced portfolio Resistance to debasement due to limited supply To be fair and honest, I do not have a strong opinion on any of the above. I will say that opinions seem to be a bit too polarized: either investors think that Bitcoin is massively underappreciated and that few truly understand the value that is yet to be unlocked, or they believe that it is a mass delusion that the market has agreed, somehow, to put money behind. I find myself roughly at the midpoint of this wide range, believing that there are benefits to trading GBTC or the underlying asset as I propose below. Don't fight the tape For a long time, I stayed away from Bitcoin and GBTC due to (1) my not properly understanding the core fundamentals well enough and (2) the little track record of the asset in the market, which made analyses like price action, volatility, and correlations nearly useless. But I have changed my stance. Today, I accept Bitcoin and GBTC as assets (1) that could (emphasis on "could") compound massively over time, and (2) whose prices are driven in great part by market sentiment rather than fundamental factors, like cash flow generation. This being the case, the right approach to GBTC, in my view, is to trade it as follows: own it when the market supports its price, sell it when it doesn't. If I monitor GBTC daily, I can choose to hold shares when the 10-day moving average as of the prior trading day is above the 200-day moving average. This approach effectively cuts my downside before losses become too large, while I participate in most of the upside when it happens. Using this very simple strategy, I ran a backtest on Bitcoin, going back to 2015, that produced the following results: DM Martins Research Annualized return of 43%—about 50 bps better than simply buying and holding the crypto Annualized volatility of 45%—more than 10 percentage points better (i.e., less risk) than buy-and-hold Sharpe ratio of 0.85 , assuming a risk-free rate of 5%—compared to 0.69 for buy-and-hold Maximum drawdown of 64% —compared to an 83% max peak-to-trough decline for buy-and-hold It is also true that buying and holding Bitcoin or GBTC has been most successful immediately after large drawdowns (think the start of the COVID-19 crisis, the 2022 "sell everything" bear market, etc.), which would suggest that the current selloff of 44% from all-time highs might be a dip-buying opportunity. At the same time, diligently following the trading strategy has produced more consistent results, while minimizing the risk that investors find themselves deep in a drawdown that could take many years (or, who knows, more than a decade, as was the case of tech stocks in the early 2000s) to resolve itself. The trading strategy, which signaled to sell GBTC on November 4, 2025 and not buy it back since then, allowing me to sidestep 33% in losses, tells me that I am far from considering owning shares of the fund today. Bitcoin would probably need to recover to about $95,000 or $100,000 and stay there for a week or two, displaying clear signs of market support, before I pull the trigger. In the long run, and assuming that the crypto never proves to be this century's version of the 1600s tulip mania (I doubt that this will be the case), being patient now and diligent along the way will likely prove to be a smart move in the end.