Amid the stock market turbulence experienced throughout last week, the Winklevoss Bitcoin Exchange has fared very well.
The Bitcoin Investment Trust Sees Smooth Sailing
The Bitcoin Investment Trust offers the first publicly quoted securities which derive value from the Bitcoin price. BIT is publicly quoted on the OTCQX®.
GBTC is sponsored by Grayscale Investments, which believes “digital currencies are poised to radically transform our financial system.” The firm wishes to offer investors “an established, trusted and accountable partner that can help them navigate the gray areas of digital currency investing.” The firm also refers to Bitcoin as “the Internet of money.”
BIT allowed people with online brokerage accounts to accumulate digital currency. Articles from the Wall Street Journal warned investors:
Bitcoin is a highly speculative investment—the kind most financial advisers say investors should only buy into with money they can afford to lose. But some analysts think the new fund could bring the digital currency a step closer to broader acceptance by investors. For that to happen, the fund will have to overcome some early difficulties.
While this is all true, the Bitcoin Investment Trust has proven to be a source of stability amid market chaos in the first week of the New Year. The Trust began trading on OTCQX on May 4, 2015 under the ticker symbol GBTC. The fund isn’t an exchange-traded fund, and remains small, but people believe it could prompt speculative interest in Bitcoin, and the recent volatility across stock markets could abet the process.
“The OTCQX listing is also a very big step forward,” Gil Luria, an analyst with brokerage firm Wedbush Securities, told WSJ. “It has made at least a proxy ownership stake in bitcoin available to practically every institutional and retail investor.”
Leading into the end of 2015, the Bitcoin Investment Trust received much popular press, as its price increased leading into the stock market volatility. It appears investors are open to the idea of Bitcoin.
BIT offers a tax-advantaged investment account complete with designated beneficiaries. Currently, GBTC enables investors to gain Bitcoin exposure in a traditional security. Each share of GBTC equals one-tenth of a Bitcoin invalue, and every day the price is set according to the Bitcoin market price.
GBTC can be held in IRA, Roth IRA, 401(k), and other brokerage and investment accounts. Accredited investors are able to buy shares directly from the issuer, though they will entail resale and transfer limits.
As panic remains, it could be that investors with accounts move their investment accounts towards Bitcoin. Bitcoin could be seen as a tool of diversification.
Investors fear that China’s volatility could spread to global markets, causing major selloffs worldwide. China’s stock market has twice closed this week. European markets declined and in the US stocks fell 2 percent.
The Dow Jones Industrial average and Standard & Poor’s 500 both fell approximately 2.3 percent, having lost about 5 percent of their value this week. Nasdaq declined the most – 3 percent on Thursday.
Apple and Amazon were both down 4 percent and 3.7 percent each. JP Morgan Chase fell 4 percent and Nordstrom fell 5.5 percent.
Many investors blamed Chinese authorities drastic measures on the decline, such as ceasing trading and instituting trading regulations.
What do you think about Bitcoin’s performance in this turbulent global economy? Let us know in the comments below!