Bitcoin, the most well-known crypto currency, made the news last week as its price rose beyond the $17,000 mark, only to falls some 15% later in a sign of its volatile nature.
However, despite the 15% drop on 8 December, the crypto currency has still soared more than 1,000% this year alone, as its popularity has exploded. At the end of 2016, the crypto currency traded at just $952.
The recent surge in prices was triggered by the announcement from the world’s largest derivatives exchange operator, CME Group, which last week revealed it would start offering bitcoin futures as early as December, according to Bloomberg.
Yet the number of regulated investment products available for investors to gain exposure to bitcoin remains limited, with the US Securities and Exchange Commission (SEC) yet to make a decision with regards to a US-based bitcoin ETF.
The regulator is concerned about the volatility of the crypto currency, while worries are also escalating about a potential bubble following the astronomical price rises, with some hedge funds reportedly building up short positions.
But despite the restricted choice, investors have been pouring money into the small range of available regulated investment vehicles offering exposure to bitcoin.
One of these is the Swedish Bitcoin ETN, which is listed on the Nordic Nasdaq. This is one of only three regulated methods of investing in bitcoin currently available in the market, the other two being Grayscale Investments’ Bitcoin Investment Fund and LedgerX’s Bitcoin derivatives, options and futures exchange.
Eric Balchunas, a senior ETF analyst for Bloomberg, said the Swedish ETN is now bigger that 80% of ETFs listed in the US, proof of the popularity of the crypto currency among investors.
However, as bitcoin soars, the question remains of whether more providers will gain permission to launch bitcoin ETFs in the future, despite the volatility of the investment.
Meanwhile, the number of unregulated investment options into the crypto currency is growing, despite the bubble fears.
For example, TOBAM, the anti-benchmark asset manager, recently launched the TOBAM Bitcoin fund, an unregulated alternative investment fund for investors wanting to gain exposure. It is only a matter of time until more providers follow suit, making bitcoin gradually more available to a wider range of investors.
With bitcoin’s prices sky rocketing, a potential substantial fall in its value may only attract more attention from investors wishing to benefit from the astronomical rise in its price, as it may signal a good entry point for those not already invested.
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