GBTC: BitcoinInvestment Fund
The Bitcoin Investment Fund (GBTC) is now live. This means that bitcoin has finally made it to traditional, international markets. From the slums of the Internet cypherpunk community and the uncertainties of volatility to the benches of international financial markets, Bitcoin has come a long and hard way, and finally we can say that is now being recognized as a trusted investment fund.
GBTC offers the chance for investors to invest in bitcoin without even having to deal with the currency and all the issues associated with owning it. It’s like buying shares in a gold exchange traded fund (ETF). The Bitcoin Investment Trust is designed for sophisticated investors looking for exposure to bitcoin in a simple investment asset. The BIT addresses the confusing and cumbersome experience of buying, storing and safekeeping large quantities of bitcoins as an investment.
The GBTC is a private open trust that is invested exclusively in bitcoin and derives its value solely from the bitcoin price. It enables investors to gain exposure to the price movement of bitcoin without the challenges of having to deal with the cryptocurrency itself.
There will be some risks associated with investing on GBTC such as price volatility, market penetration, regulation, security, among other restrictions. However, this seems to have little or no impact, as the risk of buying and securing Bitcoin will be managed by Grayscale Investments.
One share of GBTC represents 1/10 of the price of bitcoin. As of press time, bids for GBTC shares were averaging $35.51, the equivalent to $355 which is above the current market price Bitstamp 247.58.
This discrepancy is simply the result of speculation; it represents a chance for the legacy holders to sell and then re-buy GBTC shares at market prices and easily duplicate the initial investment.
In a quick move, the Bitcoin Investment Trust launched ahead of the Winklevoss Bitcoin Trust on the OTC Markets. Meanwhile, the Winklevoss Bitcoin ETF is still waiting for the approval from the Securities and Exchange Commission (SEC). This is expected to be made somewhere along this year.
Cameron and Tyler Winklevoss deliberately lost the race. Since they intended to be a fully compliant exchange-traded fund, they have decided to go through the full SEC process to register a formal exchange-traded fund, which they believe will give more credibility and confidence to investors. The Winklevoss Brothers have adopted the same strict attitude towards Gemini, a bitcoin exchange they are planning to launch in the near future.
The creation of the GBTC is seen as an important step for Bitcoin’s bid for mainstream acceptance. Bitcoin enthusiasts hope that regulated instruments will encourage a bigger investment base, which relieves them of having to deal directly with the virtual currency. The Bitcoin community believes that more liquid trading will help stabilize bitcoin’s volatile price and turning it more appealing for online payments and value transfers.
What do you think this means for Bitcoin? Let us know on the comments below!