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Grayscale Bitcoin Trust’s [GBTC] rise sharper than Bitcoin’s [BTC] price; institutional investors on an upswing?




Grayscale Bitcoin Trust's [GBTC] rise sharper than Bitcoin's [BTC] price; institutional investors on an upswing?
Source: Pixabay

The massive Bitcoin [BTC] price rally that began earlier this month, not only reaffirmed faith in virtual currencies, but also oversaw a wave of institutional growth. Grayscale Investment Group, the crypto-centric asset management firm, saw its Bitcoin Trust [GBTC] grow, relative to the price of the king coin.

Alex Krüger, an economist and trader, drew the difference in valuation surges between Bitcoin and the GBTC, citing “new money” that is being injected into the digital assets realm. He stated that Bitcoin saw a 28 percent rise against its price since April 2, while GBTC had risen by a whopping 47 percent, over the same time period.

His tweet read,

“$GBTC 10% today, outperforming $BTC.
– GBTC +47% since Apr/2 breakout
– BTC +28% since Apr/2 breakout
Another symptom of new money coming into crypto”

GBTC has seen massive growth since the beginning of February. The market price per share, as recorded on 5 February, stood at $3.60, and by the close of the first week of March, it stood at just under $5, a 38.88 percent pump. Over this period, Bitcoin saw a mere $300 increase in its price.

Prior to the April 1 price rally, the market price remained under $5. At its peak, on April 11, the price per share had risen by 47.19 percent to reach $7.36. However, this past week’s market correction not only dropped the collective market’s capitalization to under $180 billion, but also the price of GBTC to under $6.50.

Source: Trading View

GBTC as a metric of Bitcoin and its institutional effects is noteworthy as it is the maiden “publicly quoted security solely invested in and deriving value from the price of Bitcoin.” At press time, one GBTC share was valued at 0.00098409 the price of Bitcoin, or $5 when based on the price of the top cryptocurrency.

With respect to the above ratio, investors are paying a 37 percent premium on top of a 2 percent annual fee.

GBTC is one of the few products to allow investors to partake in the risk and reward of investing in the virtual currency market, without the hassle of private key storage. Brokerage accounts are also eligible for GBTC.

Hence, the growth of GBTC, especially relative to the price of the underlying digital assets, overstates the influx of institutional investors. Given the institutional target infrastructure, Krüger opined that this increase is due to large scale financial players.

Fundstrat’s Tom Lee commented on the GBTC’s rise in early February, stating that institutional increase is firmly behind this rise.

However, some crypto-proponents do not see this investment vehicle as a net gain for the industry in the long term. They dispute GBTC as an investment rather than a store of value or a medium of payment. If Bitcoin wants to eventually replace fiat currency, it needs to be seen not as a get-rich-quick scheme and more of a method of payment.

Additionally, in a recent Diar report, it was noted that institutional products have been on a rise, when compared to the rest of the digital asset market. Since dropping to 10 percent of the total volume in December 2018, their share has jumped to 19 percent by the beginning of April. Given the success of GBTC, the 25 percent mark looks breakable.

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SEC delays VanEck Bitcoin ETF decision days after delaying Bitwise proposed rule change





SEC delays VanEck Bitcoin ETF decision days after delaying the Bitwise proposed rule change
Source: Unsplash

The Securities and Commission Exchange [SEC] has yet again delayed another Bitcoin ETF. This time around, the commission has decided to delay the VanEck Soldix Bitcoin ETF, one of the most awaited exchange-traded funds in the cryptocurrency community.

In the document released today, the exchange has asked for more comments on the proposed rule change and has also asked for further information on queries related to the exchange-traded fund. The commission stated that it has received 25 comments on the proposed rule change so far.  It stated,

“On January 30, 2019, Cboe BZX Exchange, Inc. […] filed with the Securities and Exchange Commission, […] a proposed rule change to list and trade shares of SolidX Bitcoin Shares issued by the VanEck SolidX Bitcoin Trust […] The proposed rule change was published for comment in the Federal Register on February 20, 2019.”

It further stated

“On March 29, 2019, pursuant to Section 19(b)(2) of the Act, the commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.”

Notably, the main concerns of the commission continue to be market manipulation and the measure taken by the platform to protect its investors. The commission is currently seeking comments on 14 queries pertaining to the VanEck Bitcoin ETF.

This includes the views of the ‘commenters’ on whether the exchange has entered “into a surveillance-sharing agreement with a regulated market of significant size related to bitcoin?”, the relationship between the Bitcoin futures markets and the Bitcoin spot market, with the focus being price formation, the relationship between the Bitcoin futures market and the proposed Bitcoin ETF, and the commenters’ views “of the Exchange’s assertions that bitcoin is arguably less susceptible to manipulation than other commodities that underlie ETPs”.

Gabor Gurbacs, Director of Digital Assets Strategy with VanEck said on Twitter,

“The VanEck SolidX #Bitcoin #ETF decision has been postponed by the SEC. We continue the hard work towards better-regulated, safer and more liquid digital assets markets. Bitcoin is too big to ignore. Vires in numeris!”

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