Just like bitcoin is a complement to gold rather than a substitute, GBTC is a complement to other ways of owning bitcoin. The fintech sector is constantly expanding the ways for both retail and institutional investors to access digital assets. However, if possible its still better to buy and hold your own Bitcoin versus buying GBTC. is that a Bitcoin ETF would actually track the price of Bitcoin; an ETF wouldnt trade for a premium over the spot price of Bitcoin. One of the key advantages of GBTC is that its actually backed up by Bitcoin! I am Kamal. Here's a simple single transaction case of 20 shares of GBTC bought on 1/7/21 for a total cost/share of $46.00 ( (Share purchase price + (My brokerage Commission/# of shares purchased)) and NOT sold for entire year of 2021. In spite of recent advances, investing in bitcoin and other digital assets is still operationally difficult. A tremendous, tremendous loss. Privacy Notice | Visit a quote page and your recently viewed tickers will be displayed here. As a value oriented investor, it pains me to pay a premium like this. After the 2008-2009 global financial crisis, government stimulus was primarily targeted at financial institutions, not households. Additionally, GBTC also has a set of operational risks that bitcoin purists might say defeat the entire purpose of owning a decentralised asset. Exodus Top 10 Most Influential People in Crypto: Brian Armstrong, 5 Tips Before Buying Cryptocurrency for the First Time, Exodus Top 10 Most Influential People in Crypto - Charles Hoskinson, How to build a company using Bitcoin: the Exodus story, Squid Game crypto hits zero - anatomy of a rug pull, What is BNB Smart Chain? I never found a definitive answer to this question. Yet it's worth noting that while gold and bitcoin have similar utility in a portfolio, gold currently has a market cap that is more than 40x that of bitcoin. Alert from California Department of Tax and Fee Administration. two-thirds as much money as it did during the prior 11 years. PayPal & Bitcoin: What does it mean for investors? Additionally, I'm thinking to delete all the individual transactions and just put one lump sum transaction with the cost basis and payout for sake of time but idk if that will cause issues going fwd. GBTC trades over the counter rather than on an exchange, and may have higher costs associated with trading than ETFs. Many hedge funds have started investing in bitcoin. Bitcoin is one tool to help. It would be easy to demonize Grayscale as a strange financial product that costs too much and encourages people to not take custody of their own Bitcoin. Monero vs. Bitcoin: Which is the True King of Privacy? How bot trading influences the crypto market. Whos next? Conversely, a purchase on a stock exchange is reported and their is full transparency (in the 1099 that is issued). London Stock Exchange Group raises dividend after 2022 profit increases to $1.49 billion. 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Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Metaplex raises $46 million to expand Solana NFT ecosystem, Twitter launches NFT feature for profile pictures, Where to get best interest on stablecoins in 2022, Andreessen Horowitz announces $4.5B fund for Web3 and crypto investments, IMF urges El Salvador to abandon BTC, President smiles. Are GBTC and BTC the same thing? The new instructions also clarify when taxpayers do not need to answer yes to the crypto question. Here's a simple single transaction case of 20 shares of GBTC bought on 1/7/21 for a total cost/share of $46.00 ((Share purchase price + (My brokerage Commission/# of shares purchased)) and NOT sold for entire year of 2021. Please help. GBTC is a statutory trust that seeks to track the CoinDesk Bitcoin Price Index, a leading reference for the price of Bitcoin. I did a quick calculation using my method and yours and got pretty much the same number, so I think we're doing the same thing in 2 different ways (your using the shares and price whereas I'm using the BTC and corresponding price, but the BTC/share is converting it so the units all match up). How many Bitcoins are left? Do this for each time you had purchased GBTC since the cost of the shares and the Bitcoin owned from each purchase is different. CDTFA is making it easier for those taxpayers and business owners affected by the recent CA storms to get tax relief. Coinbase is the prime example of a custodial wallet. The combined rate used in this calculator (9.5%) is the result of the California state rate (6%), the 91748's county rate (0.25%), and in some case, special rate (3.25%). What do you think about the IRS tax filing requirements? Where is Bitcoin Illegal? . Any thoughts from anyone on this thread on this approach?? The Wealthfront calculator is only really useful for when you sell GBTC or ETHE. Disclaimer: This article is for informational purposes only. Miami 2022: Mexico to make Bitcoin legal tender? The previous mentioned equation was close, but didn't get to the actual cost basis. The wealthfront spreadsheet and Grayscale pdfs are a reasonable places to start for a single transaction (see links below) but gets complicated and time consuming beyond that. Bitcoin maintains constant uptime. Ditto@barry13the @rudyrabbit proposed formula, yields the wrong units (and wayyy to low of a cost basis amount/transaction), which is what tripped me up last week. It is independent of the high debt levels widely found around the world. The investment objective of the Trust is for the NAV per Share to track the Bitcoin Market Price per Share, less the Trust's liabilities (including . IRAs, Self-Directed IRAs) . GBTC is not the same as Bitcoin. For example. Currently surfing the best waves in South East Asia. 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Its a publicly held grantor trust. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. When Was Bitcoin Created? Next week, Hawk will be auctioning the skateboards he used during his last tricks, and each of the NFTs read more. The Ministry of Finance partially supported the proposition, adding that it needs further consideration. Finally, remember never to buy GBTC/ETHE or any of that sort of crap again! Over time, as technology improves, and there is more competition in the space, I expect investors will push GBTC to reduce this. At the beginning of 2020, government and private debt were already near record levels. Ontology Staking: How to Stake Ontology Fast! * This was a voluntary filing. I worked for the I.R.S. GBTC trades at a premium over the Bitcoin spot price. Inflation is up and Bitcoin is down, but why? I am an Enrolled Agent. That observation No quantity of shares listed, no cost basis. Is the Bitcoin blockchain the next stop for NFT hunters? Is Bitcoin mining profitable? The trust requires a minimum investment of $50,000 and charges. Former Twitter CEO, Jack Dorsey, announces Bitcoin Legal Defense Fund, The Rule of 101: crypto trading lessons taught to me by my Grandmother, Rapper Meek Mill fans will need ETH address to hear new mixtape, Remote working on the blockchain: the Exodus story, Crypto.com faces $34 Million hack, funds returned to users. Since 1,000 shares of GBTC is equal to a single Bitcoin, we can see that buying one Bitcoin's worth of GBTC will cost $12,820. There are tradeoffs between protecting against accidental loss, protecting against theft, adequate verification, and convenience. Here's a quick detailed example for a single transaction. Given the current state of technology, the most direct way to own bitcoin is to set up your own hardware wallet or cold storage wallet, then use a seed phrase to access it. No matter how simple Bitcoin may seem to those in the crypto community (and to those who. Also, it should be pointed out that GBTC functions like a traditional financial product in that it doesnt trade during off-hours. The highest share price in the past year. do you have some number in the 1e box? This is a tricky question that needs clarification. tl;dr: If you are using TurboTax to file your taxes and only acquired crypto in 2020 with real currency, but did not otherwise transact (e.g. I think you, me, and MikeP90s are all coming to the same conclusion. sell, exchange between virtual currencies, receive crypto as payment or gift, pay for something with crypto, etc), you should answer "No" to the question that asks you about cryptocurrency . Cross-chain swaps explained, What is Bored Ape Yacht Club - NFT Collections, What is crypto margin trading & how it works. It's wise to hold a small amount of bitcoin in cold storage, just in case there is a near complete collapse of the financial system. Note I copy pasted the the full 8 digit "Proceeds Rate" column for each date as the wealthfront sheet was off by a little bit (8th digit) from the grayscale website tax forms. His idea: olive-oil-infused coffee drinks. As a result, the price of GBTC may be substantially higher or lower than the value of the assets it holds, and substantially more volatile than the price of Bitcoin. I am not receiving compensation for it (other than from Seeking Alpha). Exodus Top 10 Most Influential People in Crypto: Gavin Wood, Exodus Top 10 Most Influential People in Crypto: Andre Cronje, Jobs you can do in crypto without tech skills, Exodus 7 Most Trustworthy Sources for Crypto Info. Find the Cost Basis Factor for each of these ridiculous, nonsensical, lousy GBTC transactions in your 1099-B that apparently occur every week you hold this pile of junk. (understand this forum is not tax advice). Have Watchlists? Unlike traditional currencies such as dollars, bitcoins are issued and managed without any central authority whatsoever: there is no government, company, or bank in charge of Bitcoin. For a large # of shares purchased then it maybe worth the pain. Unlike an ETF, there is no efficient creation and redemption mechanism for GBTC. The company detailed: This language was not present in the prior instructional guidance that was released in October. I did something similar for ETHE and definately got similar #'s and a net gain on these but the key takeaway is that the overall the cost basis was much higher than the formula by rudyrabbit. Russian tax authority proposes using crypto as a foreign trade payment tool . The formula for cost basis factor*total_purchase_price_of_shares for the single transaction summed for the entire year (in the weathfront spreadsheet) seems to yield the correct result for the cost basis for each transaction (at least IMO). As of September 11, 2019, GBTC had approximately $2.16 billion in assets under management (AUM) and 2.4 million shares outstanding. Don't mess with the crypto world. I believe you need to mark the response "yes". Compensation for it ( other than from Seeking Alpha ) in a regular brokerage.. The company detailed: this article is for informational purposes only Bitcoin owned from each purchase different... Approach? True King of privacy trading & how it works the previous mentioned equation was close, why... Regular brokerage account is constantly expanding the ways for both retail and institutional investors to access digital assets still. Two-Thirds as much money as it did during the prior 11 years when you sell or... 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