Bitcoin has almost doubled this year and is up about 700% over the past year. After surging to more than $64,000 ahead of Coinbase’s (COIN) public listing last week, the digital currency plunged over the weekend. Turkish central bank’s ban on its use for payment, power outages in parts of China and the ban of cryptocurrency mining in Inner Mongolia, were among the reasons for the sharp decline.
Bitcoin has benefitted from greater institutional adoption, with companies like MicroStrategy (MSTR) and Tesla(TSLA) investing in, and influential investors like Paul Tudor Jones and Stanley Druckenmiller endorsing it.
Coinbase, the largest US cryptocurrency exchange, is a rare profit-making unicorn. In the first quarter of 2021, it had estimated earnings of $730 million to $800 million on $1.8 billion in revenue. However, competition is likely to increase in the coming months, reducing transaction volumes and fees.
Grayscale Bitcoin Trust (GBTC), which is one of the few bitcoin investments products that retail investors can hold in their retirement and other brokerage accounts, is not an ETF and does not have creation and redemption mechanism that helps an ETF keeps its price quite close to its NAV. The product has been trading at a discount to its NAV lately whereas it usually traded at a premium. Grayscale recently announced its intention to convert GBTC into an ETF.
We don’t have any bitcoin ETF yet in the US, but nine providers have already applied, and many are hopeful of approval now as the new head of the SEC