Bitcoin Investment Trust(OTCMKTS:GBTC) has seen a spectacular rise over the past year along with the price of Bitcoin. The trust was trading for less than $100 this time last year and has exploded to over $1000 a share before coming coming back down to $800.
Bitcoin is the cryptocurrency based on the bloxkchain technology that has risen from less than a penny back in 2009 to recent highs over $5,000 a token.
Bitcoin Investment Trust(OTCMKTS:GBTC) is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables investors to gain exposure to the price movement of bitcoin without the challenge of buying, storing, and safekeeping bitcoins. The BIT’s sponsor is Grayscale Investments, a wholly-owned subsidiary of Digital Currency Group.
Each BIT share represented ownership of 0.1 bitcoins initially. The trust will not generate any income and regularly sells/distributes bitcoins to pay for its ongoing expenses. Therefore, the amount of bitcoin represented by each share gradually declines over time.
According to the Quarterly report issued by the Company on August 8, GBTC had 174,174 bitcoins on hand as of June 30, 2017 up from 145,258 at the same time last year. A 19.91% increase.
In the quarter ended June 30, 2017, no new Shares were created or redeemed and 761 bitcoins were deducted from the Trust’s holdings and used by the Sponsor to settle expenses 105 bitcoins accrued but unpaid to settle expenses. In the quarter ended June 30, 2016, an additional 182,300 Shares (1,823 Baskets), were created in exchange for 17,276 bitcoins, 0 Shares (0 Baskets) were redeemed in exchange for 0 bitcoins, and 750 bitcoins were deducted from the Trust’s holdings and used by the Sponsor to settle expenses.
For accounting purposes, the Trust reflects creations and the bitcoin receivable with respect to such creations on the date of receipt of a notification of a creation, but does not issue Shares until the requisite number of bitcoins is received. In connection with Share redemptions, the Trust delivers bitcoins upon receipt of Shares. As of June 30, 2017, the Trust net closing balance was 173,308 bitcoins, with a market value o $437,879,234, based on the Bitcoin Index Price on June 30, 2017.
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On August 2 Grayscale Investments, LLC, the sponsor of the Bitcoin Investment Trust announced that a fork in the Bitcoin blockchain occurred yesterday, August 1, 2017. The Sponsor is monitoring events relating to the fork and the Bitcoin Cash resulting from the fork. A record date has not been established for the purposes of any distribution that may be made in connection with Bitcoin Cash. The Sponsor will announce a record date, if any, once established.
The Sponsor can offer no assurance as to whether or when any distribution relating to Bitcoin Cash may occur. Any such distribution may be delayed or prevented due to technical, regulatory, commercial or other considerations, including security concerns. The amount of any potential distribution will be made only after allowing time for evaluation of the market for Bitcoin Cash and consideration of the manner in which to liquidate such Bitcoin Cash, which may be months after the date of this release. It is anticipated that any potential distribution would be net of expenses of the Sponsor and the Trust, including costs associated with liquidation and distribution. The Sponsor continues to evaluate all options open to the Trust with respect to Bitcoin Cash, and these plans are subject to change.
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Currently trading at a $1.5 billion market valuation GBTC has seen a spectacular rise over the past year along with the price of Bitcoin which has risen to recent $5000 s coin highs. GBTC is a private, open-ended trust that is invested exclusively in bitcoin and derives its value solely from the price of bitcoin. It enables investors to gain exposure to the price movement of bitcoin without the challenge of buying, storing, and safekeeping bitcoins. We will be updating on GBTC when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with GBTC.
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Disclosure: we hold no position in GBTC either long or short and we have not been compensated for this article.