ARK Invest increased its shareholdings in Grayscale Bitcoin Investment trust (GBTC) by 2.14 million shares in Q4, 2020. This shows the kind of belief that the company has in the fund and the cryptocurrency itself. After this investment, the company holds a total of 7.31 million shares of Grayscale Bitcoin Investment Trust. This has also lead to a huge increase in the share prices of the company. In Q4 2020, GBTC’s shares rose by 222%, and in the Q1 of 2021, it has risen 39% so far. The increase in the price of Bitcoin is also a major factor that resulted in the share price increase of GBTC.
Cathie Wood, an early Bitcoin investor was the one that filed the disclosure of the investment in the US Securities and Exchange Commission. With a total of 7.31 million shares they have in the company, their total worth in GBTC is $357.5 million. It is obvious that the investment has paid off and at the same, we can expect more investment from the company in the future too.
What is GBTC?
GBTC is a company/product or product that invests in Bitcoins. Unlike crypto that can’t be bought and sold using traditional brokerage accounts, GBTC can be. The fund was created on September 25, 2013. Initially, the company was private but then soon became available for public trading. The fund is not a traditional ETF; it is similar to it. In fact, the fund can be considered like an SPDR Gold Trust, a physically-backed ETF.
In September 2019 the fund had an approximate $2.16 billion in assets under management. To invest through the fund privately, a minimum of $50,000 is required, and a 2% annual charge is deducted. The fund also offers one of the most essential things looked at for Bitcoin and specifically crypto investors: security. It also claims to use very strong industry-leading security measures so that the money anyone is putting in their hands remains safe.
But is investing using or thought GBTC in bitcoin really necessary. I think not, yes it gets the security part right, but the 2% fee that it charges, is a lot. In fact, Andrew Left from Citron Research tweeted that owning Bitcoin through GBTC is one of the most dangerous ways. But yes for many it does make sense, and the slight price advantage they have compared to Bitcoin helps a bit. GBTC’s every share is simply a representation of 0.001 BTC, and if you happen to own 1000 of those, you own one single BTC.
What are your thoughts on the investment of ARK invest in GBTC? And has the 2.14 million shares of GBTC held by them paid-off? Let us know in the comments below. Also, if you found our content informative do like and share it with your friends.