Institutional demand for the crypto market continues, either directly or indirectly.
Recently, “Arca Investment”, which manages a group of digital assets, submitted papers with the US Securities and Exchange Commission (SEC) to create a Bitcoin Trust fund.
Thus, the Bitcoin investment fund called “Arca Accredited Investor Bitcoin Trust” becomes a competitor to the “Grayscale Bitcoin Trust” managed by “Grayscale”, which is the largest institutional buyer of Bitcoin.
The Grayscale Bitcoin Trust owns an estimated 3% of the 21 million Bitcoins that will be traded and holds $ 20 billion in assets under management at the end of 2020.
So far, “Arca” has raised $ 100,000 from investors and made its first sale on February 16th.
The general interest of these investment funds, which almost follow the price of Bitcoin in its movement, investors can add to their investment portfolios for indirect exposure to bitcoin by investing in it without actually buying or holding any Bitcoin.
The downside to trust funds is that they charge investment management fees, and stocks and funds can be traded at a premium compared to the actual asset.
Simply put, investors who trust Bitcoin can expect to pay more to purchase a structured investment product.
Additionally, buying shares of a Bitcoin product still comes with the same type of volatility as the base cryptocurrency.
However, investors will not have to worry about their private keys and they may have more resources to protect profits from taxes.
Arca helps companies manage large amounts of cryptocurrencies and offers hedge funds for investors who want to engage in cryptocurrencies.
The newest “Arca” fund is open only to accredited (wealthy) investors who can bring in at least $ 25,000 in entry.
At the same time, Grayscale requires a minimum investment of $ 50,000, with shareholders unable to sell for at least six months.
While this lack of flexibility is inconvenient in the event of a decline in the bitcoin price, which currently ranges between $ 46,000 and $ 50,000, it also helps reduce the available supply of Bitcoin in circulation, which theoretically helps the price to stabilize or rise.