Friday, July 19, 2019

Grayscale Bitcoin Trust Boosts By 300%, Affects Oil & Tech ETFs

The institutional investment product, Grayscale Bitcoin Trust (GBTC), experienced a growth of more than 300% due to its outstanding performance since February, Forbes reports. This happened despite taking a big hit recently due to the changes in the price of Bitcoin.

Bitcoin reached a new high of $13,800 but dropped by 25% to $10,300 which was the lowest point in the recent pullback. A 30% plus decline which would send BTC back in the mid $9,000s, or possibly even lower, are being expected by many in the crypto community. Still, BTC appears to be in the correction mode as it climbed up to $12,400 for a couple of hours but dropped back to support at around $11,500.

The over-the-counter bitcoin-backed security at the Grayscale investment firm is trading at about $14 a share, which is up from February’s shares’ price of $3.84 according to Forbes’ report. The price of the principal bitcoin asset has risen over the same period from about $3,366 to about $10,900 today, which is about 223% gain in price. The higher rate of growth for the investment product than Bitcoin is attributed to the fact that institutional and accredited investors are charged with increased premiums. The investors have no choice but to comply because they are hindered from holding the high-risk asset directly.

Oil and Tech ETFs

John Dobosz, the editor of Forbes Dividend Investor newsletter, compared the performance of GBTC to other assets over the same period of time and curated some observations. Assets including oil, gold, the S&P 500, the U.S dollar, an ETF for tech companies like Microsoft, Apple and Facebook, and an ETF for emerging markets were all destroyed by Grayscale Bitcoin Trust despite dropping about 15%. According to Dobosz;

“The total gain since that time for the GBTC, which tracks bitcoin pretty accurately, is up 341%. What comes in second best? You would have been okay with oil, even though oil has eaten dust and other particles in the last few weeks. Oil is up 12.8%.” 

Dobosz added that the S&P 500 is up by 8.5%, gold up by 7.7%, the iShares MSCI Emerging Markets ETF is up 1.4%, the Invesco QQQ for tech companies is up 1.7% and lastly, the U.S dollar being up by just 1%. The Forbes report further stated that the reason for this exceptional achievement is that GBTC could be the only publicly quoted U.S-based bitcoin investment product, which also holds more than 1.2% of the total bitcoin in supply.

The total assets under the management of GBTC as at the 28th of June was about $2.7 billion. With assets including Stellar Lumens, Ethereum, Ethereum Classic, Bitcoin Cash, Litecoin, Ripple and Zcash, the fund is currently at an all-time high which is likely to continue as soon as Bitcoin continues its sanguine run.

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