Closed-end vehicles such as Grayscale Bitcoin Trust avoid this problem when investors sell the shares, no corresponding sale of underlying exposures is needed. Instead, a hefty discount may open up. At present the reverse applies: GBT trades on a 19 per cent premium. It would be cheaper to invest directly in cryptos.
One snag is that they could be stolen. Some of BTCE’s charges are for specialist insurance against theft. Equally, you might lose the keys to your holdings. Protecting keys — via a fiduciary — is one reason enthusiasts pay fees to a bitcoin fund manager.
Lex initially dismissed cryptos as no more than a medium for speculation and illicit transactions. We have been forced to concede they have a broader usefulness.
For cynics, prices are a better barometer of the irrational exuberance of retail investors than the boring old VIX index favoured by institutions. As investments, however, they are still to be avoided.
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