Bitcoin has excelled as means of exchange and is slowly developing the characteristics of mainstream currencies. But for it to go the distance, what Bitcoin would require is the backing of the institutional investors. The trends in Bitcoin investment can be analyzed from the direction of the flow of funds into the currency. The volumes of Bitcoin trading are increasing everyday and have been on continues uptrend. The volumes have gone up significantly in the face of global financial crises showing the growing faith in the currency. Let’s look into how various investment groups are adopting Bitcoin and how the investment trends have been:
Hedge funds leading in Bitcoin:
Bitcoin has a total invested market of around $ 6.4 Billion. Majority of these investments (>50%) are held by near institutional funds at hedge funds and family offices. The largest fund holder to hold Bitcoin is the Panthera Bitcoin Fund with estimated holding of $ 160 million. The California based hedge fund founded in 2013 by Dan Morehead, is available to individuals with $50,000 or more to invest. A fund brochure indicates when the fund launched in July 2013, bitcoin BTC=BTSP traded at around $65. On Thursday, it traded at $418.80, marking a gain of more than 500 percent from July 2013.
Other Top Holders:
The Grayscale Bitcoin Investment Trust (GBTC) is the only publicly-traded U.S. security in the over-the-counter market invested in the cryptocurrency. It has assets of more than $60 million invested in cryptocurrency holdings with more than a 1000 shares trading daily.
The trust holders have certified that adding Bitcoin to their portfolio has improved fund performance significantly. Ledra capital specializes in allocating Bitcoin to the portfolio of the clients within the ranges of 1 to 3 percent. ARK Invest in New York holds GBTC in its $12 million Next Generation Internet ETF and the $7 million ARK Innovation ETF. The company manages four exchange-traded funds with $240 million in assets.
Results of the ETFs:
It is estimated that GBTC has delivered 67 basis points to Next Generation Internet ETF’s return and 62 points to the ARK Innovation ETF since September 2015. Next Generation ETF experienced a 15.29 percent return in 2015 while the Innovation ETF posted a 3.76 percent gain. GBTC has been a great diversifier since it has had a low correlation with other asset classes. Kingsbridge Wealth has invested about $1.7 million in bitcoin and the blockchain and has been using GBTC as diversifier.