(2) Trading Or Investing Through The GBTC ETF
It is one of the most popular options to play with Bitcoin fluctuations. The GBTC ETF is an exchange traded fund offered by Grayscale Investments. Grayscale’s GBTC trust is a trust that buys & holds Bitcoin.
It usually trades on OTC market & users can buy, sell & invest freely in them. However, the GBTC ETF is known to trade at a significant premium to its net asset value (NAV).
According to a post published in SeekingAlpha, the GBTC premium will fluctuate over time as Bitcoin rises and falls. This premium fluctuation of GBTC doesn’t perfectly track with the Bitcoin it holds.
Therefore, long GBTC holders & short sellers both will have to pay a higher premium in order to ride the Bitcoin rollercoaster.
As of December 2017, every share of the GBTC ETF represents 0.0919 Bitcoin depending on the total Bitcoin holdings in the trust as well as it share structure. But, investors & traders are still attracted towards the GBTC ETF due to a number of advantages.
Some of the benefits of investing in the GBTC ETF include eligible for tax-advantaged accounts, publicly quoted, supported by a network of trusted service providers, title & auditable ownership through a traditional investment vehicle, as well as robust security & storage.
Thus, investors & traders can freely go for investing in them.
[Read also: 20 Basic Rules To Make Money From Bitcoin Trading]
(3) Betting On Bitcoin Price Fluctuations With Bitcoin Options
It is one of the most expensive options to play with Bitcoin fluctuations. Bitcoin options are the derivative contracts that grant the right, but not obligation, to buy or sell Bitcoins at a specified strike price on a specified date.
The right to buy is known as call option & the right to sell is known as put option. Bitcoin options also trade the same way as the equity call or put options.
Bitcoin investors are required to pay certain premium for the given option which in turn depends on strike price & date of expiry. But, Bitcoin options are highly expensive in terms of premium.
It is perhaps due to highly volatile price fluctuations in Bitcoin. Therefore, trading Bitcoin option is not something for faint-hearted investors but surely for bold ones.
As the popularity of Bitcoin grows & volatility decreases, the premium is likely to reduce with time. However, at present, Bitcoin option trading is available in a handful of countries only but others may follow soon.
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