Connect with us

Bitcoin

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

Avatar

Published

on

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.





Subscribe to AMBCrypto’s Newsletter


Bitcoin

Bitcoin’s [BTC] biggest threat is its users, not governments, says Bitcoin.org’s Cobra

Febin Jose

Published

on

Bitcoin’s [BTC] biggest threat is its users, not governments, says Bitcoin.org’s Cobra
Source: Pixabay

Bitcoin [BTC], the world’s largest cryptocurrency, saw a significant surge earlier this month, helping the coin break strong resistance at $5,000 and $5,200. Following the great fall of the king coin in early 2018, the Bitcoin ecosystem was struggling with scalability and technological issues, eventually leading to the hard fork.

Bitcoin.org’s Cobra, who is also the co-owner of Bitcointalk.org, has always maintained that Bitcoin was the cryptocurrency to look out for through his various Twitter bouts with prominent personalities in the cryptoverse. Due to his strong, unbridled support for Bitcoin, he has often trashed altcoins for their low market dominance.

In a new Twitter thread, Cobra spoke about the “biggest threat” to the Bitcoin ecosystem. Even though many crypto-enthusiasts believe that governments and technological issues were the biggest threats to the king coin, Cobra had a completely different opinion.

According to the Bitcoin maximalist, users have the potential to signal Bitcoin’s doom. His tweet read,

Source: Twitter

Source: Twitter

Though most Bitcoin supporters usually support his opinions, this tweet was met with a lot of resistance. Twitterati swarmed the thread in an attempt to prove him wrong. A user named @MrHodl alleged that this could not be true as Bitcoin had “no community.” He added that this, in turn, prevented toxicity in the ecosystem.

Cobra replied to the tweet stating,



“I think there is a community, it’s just not fully representative of everyone with a stake in Bitcoin. Most holders are quiet and not too familiar with what’s going on. There’s people with 1000+ BTC and they don’t engage at all with discussion platforms, just lurk.”

Some Twitter users took it as an attack on Bitcoin investors and opposed Cobra’s stance. A user @CarstenBKK commented,

“Maybe I am lost in translation. What do you wanna tell us? That you are part of Bitcoin network of people owning/using it, but you are just disgusted by the idea, that the network is called community in the sense of direct human collaboration and affection to the groups ideals?”

Previously, Cobra had accused Twitter’s Jack Dorsey and Square Crypto of pandering to Bitcoin users, while also suggesting that the crypto project was merely a way to bring in more users for Dorsey’s CashApp. His tweet read,

“Gotta respect how hard @sqcrypto is pandering to Bitcoiners. Very clever how @Jack has embedded himself in the community; in return the community promotes @CashApp, which gives that service a small but dedicated and activist group of early users.”





Subscribe to AMBCrypto’s Newsletter


Continue Reading

Trending