Launched in 2013 and based in New York, the Bitcoin Investment Trust (OTCQX:GBTC) is an open-ended trust invested exclusively in bitcoin, and derives its value from the price of bitcoin. Investors can buy and sell shares through most standard brokerage accounts.
Grayscale Investments, a company who specialize in digital currency investing, are the manager of the Bitcoin Investment Trust. As sponsors of the BIT, Grayscale see three main merits of investing in BIT; trusted exposure to a developing asset class, a cost effective investment solution and eligibility for tax-advantages accounts. This holistic approach means investors can participate in the bitcoin craze, without worrying about buying, storing or safeguarding bitcoins.
Can the fund be hacked?
BIT allows investors to access the cryptocurrency through a traditional investment vehicle. However, as with any investment, there is a high degree of risk. Arguably, there is more than usual associated with BIT–investors are sure to remember the Mt. Gox bitcoin disaster, which still makes headlines today, years after Mt. Gox declared bankruptcy in 2014. As a result of this saga, there is much stricter regulation nowadays.
Indeed, the safety and security measures are the most futuristic element of BIT. Bitcoin banking takes place in deep cold storage vaults, where bitcoins are stored offline, as well as the private keys and any signatures for transactions. Basically nothing goes online, therefore nothing can be corrupted.
ARK Investment Management’s ARK Web x.0 ETF (NYSEARCA:ARKW) was the first ETF to invest in BIT. Due to the virtual currency’s price rise, ARK near enough doubled its money from September to November after investing in BIT in 2015.
BIT was listed within the 2017 OTCQX Best 50 Companies. Almost 400 companies trade on OTCQX so this is no easy feat–this annual ranking is based on performance throughout 2016.
According to the Financial Times, as of February 11, 2017, the investment analyst covering Bitcoin Investment Trust advises investors to hold their position in the company. This has remained unchanged for a year now and is downgraded from a prior forecast. Before this, the consensus forecast, from Wedbush Securities, advised that BIT would outperform the market.
The BIT is performing positively this year, hitting a 52-week high of $152.00 on January 4, 2017.
A preliminary prospectus filed with the Securities and Exchange Commission on January 20, 2017 has revealed that the BIT expects to list on the NYSE Arca, in a $500 million initial public offering.
Now the wait is for a bitcoin ETF, which is surely just a matter of time. Since ETFs cannot purchase bitcoin directly, the BIT is the closest thing to a bitcoin ETF… that is, until the Winklevoss’ fund is approved. The SEC faces a deadline of March 11, 2017, to make their decision as to whether the Winklevoss Bitcoin Trust ETF can trade on the BATS Global Market exchange. This will create competition and explains the timing of the BIT’s IPO.
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Securities Disclosure: I, Emma Harwood, hold no direct investment interest in any company mentioned in this article.