During the price gains over the last several weeks, the focus has been on the big bitcoin exchanges, particularly the Chinese exchanges that are trading at a premium to U.S. exchanges. That being said, the two publicly traded vehicles that offer investors exposure to bitcoin have also been seeing considerable volume.
XBT Provider manages Bitcoin Tracker One and Bitcoin Tracker Euro, which are exchange-traded notes (ETNs) that allow people to buy exposure to bitcoin on public markets such as Nasdaq OMX Stockholm. Because of this, the ETNs offer investors worldwide the opportunity to invest in bitcoin. Every share of the ETN represents 0.05 BTC. Over the past few days, and yesterday in particular, the trading volume and price for Bitcoin Tracker One have increased significantly.
While these ETNs have been trading approximately 650-750 bitcoin per day, on November 3rd, the exchanges saw 2,688 bitcoin traded. XBT Provider is able to issue more ETNs by purchasing bitcoin on the open market and holding it securely.
“We are currently seeing a very high demand from both retail and institutional investors. We believe, however, that institutional investors will play a bigger role in the future,” said Christoffer De Geer, marketing manager at XBT Provider, in an interview with Bitcoin Magazine.
— Grayscale (@GrayscaleInvest) November 3, 2015
The Bitcoin Investment Trust (GBTC), which is a Digital Currency Group product, has also experienced unprecedented volume increases. Its 30-day average volume is 8,291 shares. However, GBTC experienced volume of 71,697 shares yesterday. One share of GBTC is approximately 0.1 BTC before fees.
These two bitcoin instruments are attractive to investors because investors can gain exposure to bitcoin without the work involved in setting up a secure wallet and a trading account at a bitcoin exchange. Instead, institutional investors can use the tools and markets they are trading on every day and purchase bitcoin just like a stock or commodity. Buying shares of GBTC or what XBT Provider offers is as simple as buying a share of Apple. Further, investors can take advantage of tax advantages found within IRAs to buy these shares, giving them further incentive to participate in the rally, which doesn’t appear to be slowing down.
As Bitcoin Investment Trust's founder tweeted, as the wheel continues to turn, it gets faster and faster:
Watch the bitcoin flywheel effect begin...
— Barry Silbert (@barrysilbert) November 2, 2015
Jacob Donnelly is a full-time product manager and freelance journalist covering stocks, business and bitcoin. He runs a weekly digital currency and blockchain newsletter called Crypto Brief.