Why you may need bitcoin within your 401k or IRA with Grayscale Bitcoin Trust (GBTC)

If you are wondering why you should consider owning some exposure to Bitcoin in your 401k or IRA, I have a good reason to share… I want to show you one screenshot. Below is a screenshot of our Federal Reserve’s Balance Sheet. (source: federalreserve.gov)

federal reserve balance sheet.png

What does this mean? Quick rundown

Simply put, when the FED prints money like they are doing, they are pumping money into the system, the dollar becomes more common and this expansion is what drives the stock market up, makes asset prices like home values go up, and is what long term robs the lower socioeconomic class of citizens. You don’t see the price of small daily items go up, but asset prices do, like stock, real estate, bonds, etc. While stocks and real estate markets react to dollar printing in an inflationary way, they actually are reacting in a deflationary way when comparing to bitcoin! If that does not make sense see the below screenshot explaining easily what this means.

inflation vs deflation.png

So how it bitcoin deflationary? And why does it belong in my 401k/IRA

If you had bought bitcoin at any time and held for 3+ years, you have made money. This means your buying power has grown over time. The problem with printing money faster than the value a country can create with their output causes inflation, which is taxation without representation. Read more about the effect of printing money and its impact on the economy, here.

Because inflation is inevitable, and we know the federal reserve will continue to print money to encourage spending, we as people of America deserve an asset that operates deflationary to help protect our wealth, especially if we do not have the option to buy a home, or own the manipulated stocks.

I have some data to share about Grayscale Bitcoin Trust

  • 88% ~ of investment came from institutional investors, like hedge funds.
  • Grayscale Bitcoin Trust raised $388.9 million in Q1 of 2020, which is nearly double the previous quarterly high of $254.8 in Q3 of 2019.
  • Hedge Funds want exposure to Bitcoin because of the quantitative easing and inflationary money printing. They know their stock values will become inflated before a Massive Crash.
  • Each share of GBTC is worth 0.00096107 BTC per share as of June 5th, 2020, with 2% annual fees.
  • Grayscale Bitcoin trust is the first publicly quoted security that is available to purchase and have exposure to the price of Bitcoin.

Some of the above numbers are staggering. The growth and demand from hedge fund money is wild and what is even crazier is that Grayscale had bought 18,910 Bitcoin between May 12th and May 26th, and only 12,337 Bitcoin were mined during that time!

These statistics to me are incredibly bullish and are foreshadowing for future Wallstreet and Hedge Fund Managers that will be investing and taking action to get the deflationary power of Bitcoin in their portfolio.