GBTC Archives

Forget Winklevoss ETF, here are alternative Exchange Traded Bitcoin backed Instruments to invest

Posted on March 14, 2017 | by [email protected]

Second Week of March witnessed heavy drama in terms of Bitcoin price and swaying fundamentals thanks to Winklevoss ETF that was pending approval. The SEC set the date of verdict on 10^th March, before which the Bitcoin prices rallied anticipating the ETF approval. Nevertheless, Securities and Exchanges Commission decided to reject the proposal owing to the risks the Bitcoin markets possess in terms of hacks, security and the irregularities in monitoring. Nevertheless Winklevoss brothers are persistent over the ETF as few Bitcoin based instruments that are being actively traded over various markets have set the precedent. Let’s delve deep into what these instruments are and how they are faring:

Bitcoin ETI:

Europe has been the forerunner in the standardization of the cryptocurrency assets and providing them a platform that is comparable to mainstream assets. A bitcoin backed Exchange Traded Note (ETN) was approved in 2015 in Sweden followed by the approval of a Bitcoin Exchange Traded Instrument (ETI) which was approved in Gilbraltar. The ETI enables indiviudals to invest in institutional instrument that is representative of digital currency. The ETI trades under the ticker ‘BTCETI’ and is approved by Gilbraltar Stock Exchange. The instrument was also approved by Germany’s Deutsche Borse and has found its place in special investment vehicles (SIV).

XBT Provider:

XBT provider is a publicly traded Bitcoin fund exclusively for Europe. It is designed to track the movements of its underlying asset which is Bitcoin in this case. The fund offers Tracker one(ticker: COINXBT) and Tracker EUR (ticker:COINXBE) in the form of an Exchange Traded Note (ETN). The fund investors have enjoyed good and consistent profits over the period of XBT Provider’s growth.

Bitcoin Investment Trust:

‘Bitcoin Investment Trust’ was launched in 2013 by Barry Silbert, is an open ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables accredited investors, with annual incomes greater than $200,000 or assets of more than $1 million, to gain exposure to the price movement of bitcoin for a minimum investment of $25,000 without the challenges of buying and securely storing bitcoin. The price of GBTC shares roughly account for 10% of Bitcoin price and hence people wouldn’t be directly exposed to the risk of Bitcoin. It also gives you additional tax benefits apart from the reduced exposure.

How to invest in Bitcoin Profitably – Part 3?

Posted on February 28, 2017 | by [email protected]

In the previous post of the “How to invest in Bitcoin profitably” series, I explained how indirect investments in Bitcoin would work. Though the methods described can be heralded as safe or risk averse, the returns are substantially small and are incurred over longer durations. But part 1 explained methods that are pretty risky if the market gets volatile. So people more often ask me a smart way of investing in the cryptocurrency where either the risk is not too high but the returns are substantial or a way that gives them additional benefits apart from the profits for the kind of risk they are incurring. Well there are a couple of ways and that is what this final post in the series of bitcoin investment posts is about. Let’s look into those methods:

Bitcoin Investment Trust’s GBTC:

Bitcoin Investment Retirement Account:

While GBTC holds good promise, it is available only for accredited investors. The other instrument which is the most common one, that also provides tax benefits along with good return on investments in Bitcoin would be Bitcoin IRA. Bitcoin IRA allows users of any scale to invest directly in Bitcoin and hence directly apes investments in real time Bitcoin markets. The customers hold the Bitcoin directly where Kingdom Trust acts as the custodian and BitGo secures the cryptocurrency. The firm uses Genesis Trading to purchase Bitcoin and has an annual contribution limit of $5000.

Due to GBTC’s limited availability, Bitcoin IRA proves to be the better option with good amount of returns aggregated over a period of time. It would also provide tax benefits and good exposure to Bitcoin markets.

Bitcoin Investments: Institutional Investors stepping up, while small funds double down

Posted on October 29, 2016 | by [email protected]

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.

What’s The Best Way to Invest in Bitcoin: Bitcoin IRA VS GBTC (Bitcoin Investment Trust)

Posted on October 7, 2016 | by [email protected]

Bitcoin is probably the currently most exciting development with an appeal that cuts across a wide variety of industries. Bitcoin a digital currency; hence, it has applications in the finance industry, e-commerce, technology, global economy and trade, and it could even upend geopolitical paradigms.

Al Gore, 45th Vice President of the United States says “ I think the fact that within the bitcoin universe an algorithm replaces the functions of [the government] … is actually pretty cool. I am a big fan of Bitcoin” More so, Ben Bernanke, former Chairman of the Federal Reserve says “[Virtual Currencies] may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.”

The fact that Bitcoin holds such a widespread appeal and the fact that it has the potential to rewrite the history of the world has brought it into limelight in the investment community. Now, investors are looking for ways to invest in Bitcoin in order to get a first-mover advantage. This article provides insight into two of the major opportunities for investing in Bitcoin.

Meet Bitcoin IRA

Bitcoin IRA is the smartest way to invest in Bitcoin especially for smart folks who understand that the government is not likely to keep its end of the bargain if social security fails during their retirement. A BitcoinIRA package provides you with a great opportunity to invest exclusively in Bitcoin for retirement instead of dividing your retirement portfolio between bonds, stocks and other IRA-eligible assets.

With BitcoinIRA, you’ll buy Bitcoin directly from exchanges and keep them in your digital wallet in secured vaults. After buying the Bitcoin, you’ll sit back and watch your investment grow as the adoption of Bitcoin continues to accelerate.

Meet GBTC (Bitcoin Investment Trust)

GBTC (Bitcoin Investment Trust) provides investors with an opportunity to invest in Bitcoin through the familiar vehicle of a publicly traded security. Bitcoin Investment Trust was established in 2013 with the symbol “GBTC”. It has about $102.77M in assets, shares outstanding of 1.86M, and each share of GBTC will buy you about 0.09414055 BTC.

The main selling point of GBTC is that it allows you to invest in Bitcoin without worrying about buying, storing, or selling your Bitcoin. More so, you can easily buy or sell GBTC shares during a trading session at USD prices without having to do complex calculations on how much your Bitcoin is worth per time.

Bitcoin IRA VS GBTC

The first difference between BitcoinIRA and GBTC is that BitcoinIRA gives you direct exposure to Bitcoin while GBTC gives you an indirect exposure to the digital currency. In essence, the value of your Bitcoin IRA portfolio is influenced by the fundamental forces of demand on and supply on Bitcoin.

Conversely, the value of your GBTC holdings will be influenced by fundamental factors, technical analysis, speculation, spread, volatility index, momentum, and volume price actions among other things. Hence, many things could potentially go wrong with an indirect investment in Bitcoin using GBTC than through a direct investment with BitcoinIRA.

Secondly a direct investment in Bitcoin through Bitcoin IRA could be potentially more rewarding than an indirect investment through GBTC. A unit of Bitcoin currently trades around $612 while a share of GBTC trades for about $87. Interestingly, Bitcoin has a market value of $9.733B with total Bitcoin mined at 15,914,350. In contrast, GBTC has about $102.77M in assets, shares outstanding of 1.86M.

In the last one year, Bitcoin has gained 151.57% from October 7, 2015 to October 6, 2016. Bitcoin started at $243.27 one year ago, it made a one-year high of $768 in June, and it currently trades around $612. In the same period, specifically from January 25, 2016 to October 6, 2016, GBTC has gained 81.03%.

Thirdly, BitcoinIRA offers you much more freedom than a GBTC portfolio. Once you have set up a self-directed IRA, you can buy and invest in Bitcoin for retirement by setting up a contribution schedule. More so, you can easily rollover your 401k or rollover your IRA into a Bitcoin IRA for bigger returns. In contrast, GBTC is subject to many constraints such as being a pre-approved investor. More so, GBTC subjects investors to a 2% annual fee on their portfolio.

Final words,

There are advantages to direct Bitcoin investments through BitcoinIRA and indirect Bitcoin investments though GBTC. However, the individual investor will be better served opting for a direct Bitcoin investment through BitcoinIRA because it gives you greater control over your portfolio.