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Trading volume on Grayscale Investment’sInvestment Trust (GBTC) has risen sharply this year. The first half of 2019 saw GBTC investments under $500 million per month, but volumes have increased to nearly $2 billion in June.
The growth has been consistent, and the month of July is shaping up to be even substantially higher. With the dramatic increase, some have suggested that widespread investor interest in Bitcoin and cryptocurrency is increasing as well.
Trading volumes for @GrayscaleInvest’s Bitcoin Investment Trust (GBTC) have risen considerably over the year as public equity investors warm up to #bitcoin. Track GBTC and #crypto trading volumes at https://t.co/dFhoJimFRU. #DropGold pic.twitter.com/sPYyAqeRJg
— TradeBlock (@TradeBlock) July 24, 2019
Without question, the price of Bitcoin (BTC) has had a good run thus far in 2019. In spite of recent retracements from 2019 highs of around $13,000, the top cryptocurrency by market capitalization is still up 300% on the year.
This sort of dramatic recovery has increased coverage for Bitcoin on national mainstream media outlets. This growth in potential cryptocurrency awareness has subsequently led to increased investor attention. However, many investors see the barrier to entry and the direct ownership of Bitcoin as something of a dangerous game.
Grayscale’s platform provides a relatively simple way to enter the Bitcoin space for legacy investors. No matter how simple, cryptocurrency exchanges present a whole new set of nomenclature for investors, as well as Once you've bought or received bitcoins; you now need to keep them as safe as possible. This guide will provide... More risks.
Unlike cryptocurrency exchanges, however, Grayscale allows investors to participate indirectly. By owning shares in GBTC, investors do not hold coins directly but can still realize gains and losses. This provides a bridge between legacy investors and the cryptocurrency marketplace.
The question, of course, is whether such an investment vehicle really provides the benefits it promises. Like other platforms seeking to remove barriers to entry, Grayscale offers customers a helpful solution.
Nevertheless, the foundational principle for Bitcoin is direct peer-to-peer payments. While investors in GBTC may enjoy some of the market growth in Bitcoin, they do not actually participate in the network itself, only indirectly.
This type of vehicle completely eliminates the payment use case, offering instead only a store of value option. While the market increases, this indirect participation is lucrative. When it declines, the use of the coins themselves for payment is completely lost — a net negative for the network at large.
Regardless of the consequences of such investment structures, interest is undoubtedly up. As the public continues to move toward Bitcoin in times of financial and political crisis, the market will likely respond in due time with price stability.
Do you think the increased Grayscale BTC volume is a positive sign for thing to come? Let us know your thoughts in the comments below!