Find More On These 2 Funds That Invest In Bitcoin
Know all the information in Bitcoin investment as it is the major investment mode of the future. Read on.
How Does Investment Happen In Bitcoin?
It was observed that when Bitcoin burst on the scene in 2009, there were very few people who could wrap their minds around the idea of money existing purely in cyberspace as however people who had grown weary of the central banks’ control over and manipulation of currencies latched onto it quickly with investors looking for ways to diversify their portfolios. Again as its popularity has grown, the Bitcoin that has no central authority has been used increasingly for international money transfers as well as for everyday commerce where more than 100,000 merchants now accept Bitcoin for transactions.
It is also because it has a finite and known cap on its supply as the value of Bitcoin increases as demand increases making it an attractive vehicle for investors, that is also a very volatile one as the last few years have shown bitcoin’s closing prices have soared as high as $18,402 and as low as $ 3,234 further on cracking just $ 8,000.
While it is bitcoin’s volatility that can be attributed to several factors that include the fact that it remains not yet well understood as a store of value or a method of transfer. Here the investors can become very skittish about Bitcoin as it makes the headlines over security vulnerabilities or its use in drug trafficking. Additionally, the cryptocurrency’s regulatory status is still unclear in most jurisdictions whereas in the US the Securities and Exchange Commission has rejected several applications for Bitcoin exchange-traded funds. This is how the blockchain ETFs hold stocks of companies that have invested in blockchain technology are more common whereas currently there are eight such ETFs trading in regulated markets.
This makes investing directly in Bitcoin a bit more complex requiring the ability to store and protect them however investors who are intrigued by Bitcoin, either as speculative play or as a way to diversify a portfolio do have a couple of ways to play.
The Grayscale Bitcoin Trust
As it was established as the Bitcoin trust, an open-minded private trust by Alternative Currency Asset Management this fund is currently sponsored by Grayscale Investments LLC. When it started trading publicly under the symbol, GBTC, it is now called the Grayscale Bitcoin Trust. Later on, Grayscale said its Bitcoin Trust became and an SEC reporting company today following the approval of itsForm10 applications by the SEC.
Here the fund’s objective was to track the underlying value of Bitcoin much like the SPDR Shares ETF (GLD) tracking the underlying value of gold. Whereas it has $ 2billion in assets under management and an average daily trading volume of 2.65 million shares a day. Therefore the fund’s assets are stored with Xapo, Inc. as they are protected with extreme cryptographic security. With this fund comes a very high expense ratio of 2% partly to cover the extra cost of safekeeping.
Currently, the trust itself is open only to accredited investors that have earned income over $200,000 or have a net worth over $ 1million with a minimum investment of $ 50,000. This is as an investment vehicle that trades over the counter however GBTC comes available for investors to buy and sell in the same way as virtually any US security. While GBTC can be traded through a brokerage firm is also available within tax-advantaged accounts like IRAs or 401(k)s. thereby it is often noted that investors are eligible to purchase as little as just one share of the GBTC public quotation. Thereby Grayscale offers several other cryptocurrency investment trusts including one for Bitcoin Cash.
ARK Investment Management
There is a New York-based ARK Investment Management that manages four ETFs with more than $240 million in AUM as one of its funds, ARK Next Generation Internet ETF that has invested in the Bitcoin revolution thereby purchasing those stakes in the Grayscale Bitcoin Trust. While it is to be noted that ARKW is an actively managed ETF with around $ 358 million in AUM, investing primarily in cloud-based companies with leading the next-generation technologies such as Tesla (TSLA), that is currently nearly 10% of the portfolio; Square, Inc.(SQ), coming with nearly 8%, and Twitter (TWTR), that is just over 4%. It is also notedthatitowns783,131 shares of Grayscale with a current market value of $ 7,83,118 which is a1.64% stake of the portfolio with an expense ratio for the fund as 0.75%.
Along with another fund, ARK Innovation ETF it seeks out investments in what it views as disruptive technologies that have invested in Grayscale in the past. Here the portfolio doesn’t contain any shares currently, however.