A major Bitcoin Investment Trust in the United States has fallen to its lowest level of $7.40 for the year 2018, report says. The company, Grayscale Bitcoin Investment Trust (GBTC) which is the only of its kind in the U.S was down by 10% just last week.
This is unexpected as GBTC is said to be the closest substitute to an ETF for long term investors and inexperienced traders who would rather go through a third party.
GBTC’s drop has been attributed to some factors, one of which is the high fees charged by the trust, which has driven clients away from the company to look for alternatives, making GBTC a lot less popular. In fact, some traders say the trust charges 2% for every $1000 invested, a rate which they think is exorbitant.
Bitcoin’s decline obviously has also been implicated in the drop of GBTC. Bitcoin price has experienced an almost steady decline since the year began, which has led to massive sell off of the asset. There have also been speculations of further decline in the price so it is logical to say it may have affected the company.
The most interesting part however is that the drop has to do with the bleak future of Bitcoin ETFs in the U.S owing to SEC’s reluctance to conclude on ETF applications. Tyler Jenks, the resident of Lucid Investment mentioned this following GBTC’s drop. SEC has turned down many ETF applications since the year began and has not concluded concerning several others.
Earlier this week, analysts predicted that SEC’s attitude towards the ETF applications could lead to a crash in the cryptocurrency market in the U.S and this may be the first sign of many crashes to come.
Competitors are also springing up which will make it easier for investors to abandon the U.S market. According to reports, a cryptocurrency bank is to be launched soon in Switzerland for which $104 billion has been raised and there are many other such financial institutions which provide similar services as GBTC.
It is therefore not surprising that the company is experiencing its lowest levels at this time of the year and it may not recover from the drop anytime soon as the future of ETFs in the U.S is still very uncertain and more financial services companies are likely to sprout in the space despite bitcoin’s price fall.
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