Bitcoin is Being Traded at $9,086 in Stock Market, Increased Demand From Institutional Investors
When bitcoin price surged past the $4,000 mark, prominent financial analysts including Brian Kellyattributed the upward momentum of bitcoin to an increase in demand from institutional and retail investors.
Earlier this week, the share price of GBTC, the Bitcoin Investment Trust operated by Grayscale Investments, a subsidiary company of Digital Currency Group, reached $908.6. Each share of GBTCrepresents the value of one tenth of bitcoin. Hence, a $908.6 per share equates to a price of $9,086 per bitcoin, which is substantially higher than the global average bitcoin trading price of $4.583 at the time of reporting.
By law, many corporations, investment banks and retail investors are only permitted to invest corporate, personal and client funds into regulated investment channels such as the stock market. Because GBTC is the only tradable bitcoin instrument in the US stock market, large-scale investors are required to purchase shares in GBTC in order to invest in bitcoin rather than purchasing bitcoin directly on trading platforms like Coinbase, GDAX, Bitfinex and Kraken.
Since 2016, GBTC has been trading at a high premium in the stock market primarily due to its limited supply and the continuous increase in demand from institutional investors. However, the premium rate of GBTC had never surpassed the 30 percent mark in the past. As of current, investors in the stock market are paying almost double the global average price of bitcoin to invest in the digital currency.
In terms of security and privacy, experts have always encouraged and advised investors to safely store their own private keys, and remain absolute control over their funds. Non-custodial bitcoin wallets such as Trezor, Ledger, Blockchain, KeepKey and Breadwallet enable bitcoin users to oversee their private keys, eliminating the possibility of hacking attacks and security breaches leading to the loss of user funds.
But, as mentioned above, a small portion of investors in the public market are required to invest through strictly regulated channels and at the moment, without the existence of any bitcoin ETF in the market, GBTC remains as the only option.
In the upcoming months, the entire ecosystem could change drastically for retail and institutional investors. Coinbase and its flagship trading platform GDAX along with Gemini, three of the largest exchanges in the US, announced that they are actively developing platforms to better serve large-scale investors.
Gemini in particular secured a strategic partnership with the Chicago Board Options Exchange(CBOE), the largest options exchange in the US, to provide an efficient and secure trading ecosystem for institutional investors. Earlier this month, Gemini co-founder and CEO Tyler Winklevoss stated:
"Gemini's key concerns in the cryptocurrency ecosystem have always been security, compliance, and regulatory oversight. By working with the team at CBOE, we are helping to make bitcoin and other cryptocurrencies increasingly accessible to both retail and institutional investors."