Bitcoin [BTC] is essentially a cryptocurrency that can be stored digitally using a combination of public and private address. While the ledger provides a guarantee against immutability and hacking, the wallet still fails to provide complete trust and security to a person.
A cryptocurrency trust fund, on the other hand, can provide a secure way of storing cryptocurrencies. Grayscale and Bitwise are the two most popular cryptocurrency trust funds in the United States. Moreover, SIX from Switzerland and Coinshares based out of UK offer similar products in Europe. Meltem Demirors, from Coinshares, tweeted,
Sweden-based XBT Provider and Swiss-based Amun AG are issuers of cryptocurrency based ETPs (Exchange Traded Product) in Europe. XBT provider also launched the world’s first Bitcoin-Tracking, Exchange Traded Products to be offered on a regulated exchange.
Moreover, the Grayscale Bitcoin Trust was the best performing fund against all other assets and securities in the US. A press release from WSJ noted,
“Grayscale Bitcoin Trust (GBTC) gained 192% for the quarter as of Thursday… The S&P rose 3.8%, gold futures went up 9% and corn futures jumped 21% during the quarter.”
These trust fund investments are currently available to only high volume traders. However, these are one of the very few cryptocurrency based investment opportunities for “investments that average investors can access in retirement or brokerage accounts.”
Reportedly, Grayscale had one of the best performing years since its launch in 2013. It added $42.7 million alone in the first quarter of 2019. More than 99% of it was directed in Bitcoin. The reports from the second quarter are due. Moreover, with the surge in Bitcoin in April-May, the investment can be only expected to be larger than Q1.
While the SEC does not yet register these assets, the major US stock Exchange still hasn’t listed it yet. Hence, there is usually a probation period associated with the selling of these assets in the market, generally for 6-12 months.
The rise in Trust fund and hedging activity in Bitcoin can only be seen as a growth indicator for the cryptocurrency. Moreover, the increase in Fund activity and advertisements like #DropGold benefit the price of Bitcoin. Also, the rise in Bitcoin price, in turn, help and the market and performance of the Trust.
Do you think that more institutional investors will engage with cryptocurrency trusts in the future? Please share your views with us.