Investors in US Market Paid $39,000 to Purchase Bitcoin in Peak With GBTC
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In the bull market of 2017, crypto investors paid more than $40,000 each Bitcoin (BTC) to purchase the dominant cryptocurrency.
In the US market, a product called the Bitcoin Investment Trust (GBTC) provided by Grayscale Investment, a subsidiary of Digital Currency Group (DCG) is that allows retail investors to put money into Bitcoin through precisely the same account used in the stock market and other public markets.
$39,000 Per BTC
1,000 GBTC is equal to one Bitcoin that the operators of all GBTC hold, as dependable and regulated custodians.
On December 18, once the price of Bitcoin attained an all-time high of around $19,500 across major cryptocurrency markets including the U.S., Japan, and South Korea, the share price of GBTC achieved a peak of around $39.
Investors who purchased GBTC shares at the time paid a premium of exactly 100 percent to purchase BTC. In other words, investors in the people US market bought Bitcoin at a cost that was twice higher than the price listed on cryptocurrency exchanges.
Right now, the share price of GBTC is $5, meaning investors in the public market are still trading BTC using a premium of over 10 percent.
Historically, GBTC has ever listed a premium in the selection of 10 to 30 percent because investors find merit in buying BTC through a strictly regulated investment vehicle that fully protects and insure its own investors.
In Oct 2017, a billionaire investor and the owner of NBA’s Dallas Mavericks, Mark Cuban, stated in the Vanity Fair New Establishment Summit in Los Angeles that he spent in Bitcoin via an abysmal note (ETN) established in Sweden with an account in the U.S.
“It is interesting because there are a lot of assets which their value is just based on supply and demand. Most stocks, there is no intrinsic value because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply demand. I have bought some through an ETN based on a Swedish exchange.”
A single investor could open an account with Coinbase and other fiat on-ramps to put money into the digital advantage, but the procedure is still complex pertaining regulation and compliance with the vast majority of retail dealers, which also led Cuban to put money into the asset via an overseas market.
More On-Ramps Needed
As Susquehanna executive Bart Smith said, because of a scarcity of on-ramps and fiat-to-crypto investment vehicles for individual investors, the liquidity of BTC is low. It had been lower in 2017 as portrayed by the substantial premium on GBTC in December of this past year.
In the months ahead, as more investment products and vehicles such as ETPs, ETFs, ETNs, and custodian solutions emerge, the more premium on cryptocurrency-focused on-ramps is anticipated to decline.