With the help of exchange services and online wallets like coinbase, buying currency through the bitcoin users and everyday investors have become so easy, but what to do, if you are interested in buying and holding bitcoin for an investment? Or what to do, if you are thinking to diversify the investment portfolio in entirely new class of asset, but have lack of resources and expertise to store and procure bitcoin?
Bitcoin investment trust (BIT) is among one of the solution of this problem. They hold the bitcoin in any trust, where investors can then make a purchase of shares. BIT is a private vehicle work to give credit to investors from last two years.
On 1st march of 2015, the sponsor of BIT named as grayscale investments made an announcement about regulatory approval received from FINRA for trade publicly fund on an e-platform which is operated by OTC market groups. This announcement provides surety that first investment of traded bitcoin fund will be by BIT and will provide the path to bitcoin for having stability in price.
When GLD started its trade, the trading spot gold price was more then $400 for one ounce. Before launching GLD, for purchasing and storing gold, investors used to call for broker who has specialized in gold buying and selling and then make arrangement for storage.
On the other hand, some investors also use simple solutions for making purchase and storage of gold coins. But this way did not include in the list of efficiency and in this way, investment becomes difficult.
During ETF, gold diversification began to earnest. Previously, I have written about inverse relationship between merchant acceptance and bitcoin price. It is assumed that acceptance of merchant push the price higher, but evidence show different. It shows that as merchant acceptance increase, bitcoin price decrease.
This phenomenon can be explained with best example that when merchant get bitcoin they convert it to fiat currency immediately. This pressure of selling can be a major driver of downward movement of slope of price, it does not matter that corporations like Microsoft and dell is accepting that digital currency. In fact, the public list of BIT may change the relationship.
About financial market, there is nothing mysterious. They simply make representation of a place, where seller and buyer make an agreement about price, but sometimes they disagree on the value. If a seller gives preference to fiat currency over bitcoin, then they may be willing to accept to low price.
During bitcoin transaction, on other side there lie buyers who consist of long-term investors. Lower price show that sellers either aggressive in view of price or outnumber these buyers.
Today, there lies a little competition among buyers, but an easy investing can change this dynamic. As these long-term investors enter the space, BIT provides the competition that is needed for scarce recourse that pushes the price upward.
Scarce resource competition is not a unique development towards digital currency. It tells the way that market is being following for many years.