Bitcoin Investment Trust (OTCMKTS:GBTC) shares have been up over 60% in a one-month period and over 80% in a three-month period recently. Additionally, it’s returned over 160% over a one-year period recently, and it could continue to build its momentum with the recent rise of bitcoin prices. Let’s take a look at what Bitcoin Investment Trust does.
In the company’s own words, Bitcoin Investment Trust is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables investors to gain exposure to the price movement of bitcoin without the challenge of buying, storing, and safekeeping bitcoins. The BIT’s sponsor is Grayscale Investments, a wholly-owned subsidiary of Digital Currency Group. Each BIT share represented ownership of 0.1 bitcoins initially. The trust will not generate any income and regularly sells/distributes bitcoins to pay for its ongoing expenses. Therefore, the amount of bitcoin represented by each share gradually declines over time.
That in mind, Bitcoin Investment Trust (OTCMKTS:GBTC) is similar to the SPDR Gold Trust, except GBTC provides exposure to bitcoin prices. That said, when the price of bitcoin rises or falls, Bitcoin Investment Trust should fall. However, bitcoin prices have surpassed gold prices recently, and bitcoin could continue to build its recent momentum due to the increasing demand for crypto currencies. Now, the cryptocurrency has been trending upwards over a two-month period recently, and it could potentially continue its run.
Now, according to come experts, bitcoin could more than double in the medium term, and therefore, Bitcoin Investment Trust shares could follow. The recent rise in bitcoin was primarily to the Japan legalizing the cryptocurrency as a payment method, and consequently, there was a higher demand for bitcoin that was purchased with Japanese yen. With Japan legalizing the use of bitcoin as a payment method, it could potentially cause a domino effect and cause other countries to follow suit. In turn, this should continue to drive the demand for bitcoin, and this would ultimately increase the price of the cryptocurrency. In turn, this should cause Bitcoin Investment Trust to rise in value.
Not only that, but there was a recent change in code of litecoin, which is another cryptocurrency, and bitcoin may have been a sympathy play. The change in the code behind the technology that litecoin is running on, known as Segregated Witness, could potentially increase the speed of transactions of the cryptocurrency. That in mind, some bitcoin investors and traders may be hoping for the same to happen with bitcoin. If and when, this happens, there could be increased activity in bitcoin, potentially driving shares of Bitcoin Investment Trust higher.
According to director at Global Advisors Bitcoin Investment Fund, or GABI Fund, Daniel Masters,“That example of a successful soft fork in litecoin has made people start to think that we could get a successful SegWit implementation in bitcoin and that could increase capacity and move us to the next level.” Moreover, Masters believes the price of bitcoin could potentially reach $4,000 per one bitcoin. That said, Bitcoin Investment Trust may have immense upside potential.
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Disclosure: No one at Street Register has been compensated in any way for the publishing of this article, nor do we hold any position in GBTC stock, short or long.