Bitcoin’s lone investment trust in the US has suffered a significant hit amid the big fall in cryptocurrency prices this year, Bloomberg has reported.
The flagship digital currency reached an all-time high of around $20,000 in December, amid a strong bullish trend that boosted the broader digital currency market. However, the virtual coin has dropped some 66% since then, with investor demand having waned amid growing regulatory pressure and a slew of security incidents relating to digital currency exchanges. Over the same time period, shares of Grayscale Bitcoin Investment Trust (GBTC) had declined around 80%, Bloomberg reported yesterday, adding that the trust’s net asset value had hit its lowest level since Bitcoin’s December surge.
While the decline in the Bitcoin price seems to be the main reason behind GBTC’s dramatic drop, some observers argue that its effect has been compounded by the trust’s expense fees. According to Bloomberg, the trust charges $20 for every $1,000 invested, or 2%. To put that in perspective, the average equity mutual fund expense ratio was around 0.59%, the newswire noted, citing data from Investment Company Institute.
“Expense ratios are insane for these funds and the current Bitcoin price is creating more problems,” Naeem Aslam, the London-based chief market analyst at TF Global Markets UK told the newswire.
GBTC is operated by Grayscale Investments, which has $1.5 billion in assets under management. The firm is one of the largest digital currency asset managers in the world.
Bitcoin’s latest decline sent the coin below the $6,500 mark in today’s morning session. The digital currency saw a sudden spike in the early hours of the afternoon session, with is price jumping to an intraday high of $6,571.46. however, following a swift pull-back, the coin is now (14:14 BST) trading at $6,475.17.
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