The vicious coronavirus had not only impacted the stock market but the cryptocurrency market too. Bitcoin has witnessed some all-time lows during the pandemic and has recently started the upward surge yet again. Now is a good time to wonder about the possibility of investing in the cryptocurrency market. While the market is volatile and poses substantial risks, the high returns are undeniable.

In times where uncertainty prevails over the economy, investors choose gold over any other assets. While there were speculations that indicated the rise of cryptocurrencies, in reality, nothing of that sort actually happened. In fact, Bitcoin, one of the most prominent digital currencies, suffered a fatal blow and is slowly recovering.

What is GTBC stock?

If you are well-versed in the conventional stock market, then GBTC or the best stock trading app australia will surprise you. It is because these stocks are not actually common stocks, in essence. The Grayscale Bitcoin Trust is basically an investment product that holds Bitcoin and allows investors to sell and purchase from their brokerage accounts. When you buy GBTC stocks, it means that you own shares of this grantor trust.

As GBTC falls under the grantor trust, you get the protection of the Securities Exchange Act of 1934 and the Securities Act of 1933. However, it is not covered under the Commodity Futures Trading Commission’s regulations.

Cash inflow into the Grayscale Bitcoin Trust

As per the latest reports, Grayscale Bitcoin Trust managed assets that expanded to $4.7 billion from $1.9 billion in the year 2020. Moreover, it has also received a cash influx of $719.3 million within the third quarter.

The Grayscale Bitcoin Trust announced that there was an increase in the number of foreign investors from 55% to 60%. Furthermore, institutional investors made up 84% of the holders in the trust.

The eligibility criteria for investing in the trust are $50,000 and a 2% annual fee.

Does owning GBTC stock mean that you own Bitcoin?

No, owning GBTC stock does not mean that you actually own Bitcoins. It is true that the Grayscale Bitcoin Trust holds Bitcoin. But, that does not mean the price of the GBTC stocks matches that of the Bitcoin valuations. In fact, sometimes, there are wide price gaps due to investor sentiments. It can sometimes overshoot or fall down drastically.

However, it is the best way to get the required exposure to cryptocurrency trading. Without the approval of an actual Bitcoin Exchange Traded Fund (ETF), GBTC is the best opportunity to shadow the cryptocurrency market without purchasing Bitcoins.

It will give you an idea if you actually want to indulge in cryptocurrency trading. For that, you will need to set up an account and pay trading fees, which are substantially higher than the one you pay for the GBTC stock.

Technical analysis of Grayscale Bitcoin Trust

The price of the Grayscale Bitcoin Trust stock has generally mirrored that of Bitcoin. However, it broke from that mold on October 22 of 2020. As a result, it offered a buying opportunity when the point came down to 14.88.

Now, GBTC stock has jumped back and is away from the purchasing range. The harsh fall from 48.65 high on January 8 of 2021, needed time to recover. Now, it is on the path to climbing up with the point of 38.75.

At the end of January, the GBTC stock declined by above 40% when it entered the correction phase. With the fall, the extremely volatile nature of the crypto market is once again highlighted.

Effect of US politics on Grayscale Bitcoin Trust

It is without a doubt that Washington DC politics influence the crypto market to a great extent. The recently appointed Treasury Secretary, Janet Yellen, announced the political views on cryptocurrency. While her tone was not scathing or unfavorable, there was not much encouragement either.

She remarked on the benefits of using cryptocurrencies to enhance the economic system's efficiency. However, she was also cautious in saying that digital currency can be used by terrorists to conduct attacks on US soil.

It actually led to a decline in the Bitcoin price. And when Bitcoin falls, the GBTC stock mirrors the almost same route.

PayPal changes the crypto market scenario!

Another major factor that drove up the prices of Bitcoin was the entry of PayPal into the market of cryptocurrency. With the use of PayPal accounts, investors can now sell or purchase different digital currencies, including Bitcoin.

Moreover, these virtual currencies can be used for other purchases. But, the merchants will be paid in their national currency, instead of crypto coins.

Is now the right time to invest in GBTC stock?

Just like Bitcoin, the Grayscale Bitcoin Trust is also vulnerable to wild fluctuations. The trust owns Bitcoin, which in itself is not a fiat currency. In fact, Bitcoin is more of a speculative investment. However, the involvement of institutional investors lends more credibility to the Grayscale Bitcoin Trust and the crypto market as an extension. However, it is also vital to keep in mind the volatile nature of the market.

It is true that the GBTC stocks gained far more than the S&P 500 in 2020. However, continuous breakouts are a matter of concern. After the latest plunge, it is slowly but steadily rising once again to develop the first base. Investors interested in investing in GBTC stock might want to wait for the next buy point. If you invest at this point, there is a possibility of suffering a massive financial loss.

Conclusion

Upon considering the various factors and the history of fluctuations of the GBTC stock, purchasing it right now is not a good idea. If you are eager to invest in cryptocurrencies, it is advisable to wait for the next buy point. You don't want considerable losses during the first few tries.

In contrast, you can shift your focus to the stock market. Use the time to research more about the profitable companies and make a list of stocks that can offer substantial returns. After all, there are more than one way to invest money.