XBT Provider AB, having launched what it claims is the world’s first bitcoin-based instrument on a regulated exchange, Nasdaq Nordic, plans to expand globally with its Bitcoin Tracker One and Bitcoin Tracker Euro, the latter having performed well against major reserve currencies and global asset classes, according to Nasdaq. The Stockholm, Sweden-based company plans to secure larger investments from institutional clients.
XBT Provider is part of the KnCGroup AB, which also owns KnCMiner AB, a bitcoin processing technology provider.
Bitcoin Tracker Euro launched with the approval Sweden’s financial supervisory authority, Finansinspektionen, on Oct. 5, 2015, for the purpose of mirroring the return of the underlying asset, U.S. dollar per bitcoin.
Bitcoin Tracker Euro, as an exchange-traded note ETN, has grown in popularity among investors on the Swedish regulated exchange, securing the title of the most-traded ETN on Nasdaq Nordic.
Bitcoin ETNs and instruments such as the Bitcoin Tracker Euro and GrayScale Investment’s GBTC have performed well against global asset classes and major reserve currencies since mid 2015. A share of GBTC is currently trading at $57.40, and since a share of GBTC guarantees investors about one tenth of a bitcoin, investors are buying bitcoin using GBTC at an average price of $602.71 per coin. That is a premium nearly 40 percent higher than the actual price of bitcoin.
The demand for exchange-traded notes and bitcoin instruments has increased in the past year, the XBT Provider team noted.
Since early 2015, the bitcoin industry has received more positive news coverage from both bitcoin and mainstream media outlets, XBT Provider Marketing Manager Christoffer De Geer said, with the exception of Mike Hearn’s controversial resignation. The bitcoin industry has seen an emergence of an increasing number of startups and applications utilizing micropayments to offer real-world applications including remittance and online incentive services. This led to the recognition of the practical uses of bitcoin transactions. More importantly, bitcoin’s price volatility has substantially declined, and its liquidity has risen in regions including the U.S., Europe, and Southeast Asia.
Another major factor, De Geer said, is the decline in global asset classes, commodities and stocks, and the growing fear among investors of a global economic slump.
External factors could have also helped the demand for exchange-traded notes and bitcoin instruments, he said, such as devaluation of the (Chinese) renminbi, the Chinese stock market crash, and the standoff between the European Union and Tsipras (Greece’s prime minister) in June. Such events have increased press coverage for bitcoin, focusing on its advantages compared to fiat currencies.
“We do not believe that the ongoing blockchain craze has done much good for the bitcoin price yet, but we believe that the private blockchain hype will translate to higher bitcoin prices at a later stage,” De Geer said.
Swiss investor Marc Faber, recognizing the underwhelming performance of major stock exchanges and assets, said that in 2015, with the exception of people who held bitcoins, the performance of all asset classes has been poor.
Some investors seeking to recover losses in the traditional finance sector have shifted their focus to secure investments in bitcoin that can remove the possibility of potential hacking attacks that can result in the loss of client funds. Thus, instead of buying bitcoin at highly-liquid bitcoin exchanges, traditional investors prefer to buy bitcoin with bitcoin instruments such as GBTC and XBT Provider’s ETNs that guarantee bitcoin ownership.
GBTC is not a real financial instrument, the XBT Provider team noted, as it offers trades at a premium to the actual bitcoin price.
XBT Providers’ ETNs listed on Nasdaq Nordic are the only exchange-listed instruments besides BIT’s (Bitcoin Investment Trust) listing of GBTC, De Geer said. By comparison, GBTC is not a “real” financial instrument of which they can momentarily issue more with increasing demand. He said XBT Provider’s ETNs are still the only bitcoin instruments consistently trading at fair value and not at a premium to the actual bitcoin price.
As it plans for global expansion, the XBT Provider team looks to secure larger investments from institutional clients.
“We do have alternative investment hedge funds and insurance companies as investors and predict larger investments from more institutions in 2016, as more asset managers start to feel comfortable with bitcoin,” a team statement said.
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