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Bitcoin has attracted a lot of attention in recent months as a new class of 39; assets. Study After Study showed that millennia prefer Bitcoin to traditional asset classes. All this attention, combined with a market capitalization of hundreds of billions, has left Wall Street licking its wounds while more money comes from commission-led executive transactions and crypto-managed self-managed businesses run by third-party companies. . Wall Street has found its solution with the launch of Bitcoin Investment Trust in 2015. The (GBTC) Bitcoin Investment Trust is an ETF (Exchange Traded Fund) that purchases and holds bitcoin.
Why the division of shares?
The reason for this split is to decrease the price of an individual stock to make it more accessible to individual investors. Currently, GBTC is trading at around $ 1,800. This means that new retail investors using apps like Robinhood might not be able to buy a single stock, and if they do, they would use most of their wallet to do it. In order to solve this problem, a split occurs in which each current shareholder will receive 91 shares whose price is proportionally lower. Since this ETF represents an underlying asset, the amount of Bitcoin that it represents will also decrease. Currently, each share represents about .092 bitcoin. After the split, each share will represent about 0.00101 bitcoin.
The shareholders of 22 January will be eligible for the split and the split will take place on 26 January. As with most equity divisions, it can be expected that increased investment in retail will lead to higher prices. Retail investors are also more volatile and are much more sensitive to FUD (fear, uncertainty, doubt) and FOMO (fear of missing).
What does it mean for Bitcoin?
First and foremost, it is important to recognize that the underlying GBBC asset, Bitcoin, is one of the most affordable assets ever created. With easy-to-use "exchanges" like Coinbase, it's time to buy, own bitcoin is much shorter than Stocks, Gold, or other underlying assets traditionally represented by ETF. For example, we have seen the growth of Coinbase at incredible rates of 125,000 users per day. If anything is clear, it is that retail investors do not really need a less expensive way to invest in bitcoin.
Moreover, since GBTC is the only ETF whose underlying asset is bitcoin, it trades with a high premium, greater than 50%. This means that if you can buy a bitcoin for $ 10,000 on Coinbase, the equivalent of a Bitcoin on GBTC will cost you $ 15,000. Finally, the fund has a management fee of 2%. It's incredibly high for an unmanaged ETF and is excessive.
Nevertheless, it should be interesting to see what kind of effect the split has on the price. Despite all the reasons not to invest in ETF over Bitcoin, will retail investors catch it as fast as they have anything else associated with crypto? Time will tell us.
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