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I chose a bad weekend to miss my update last week! A lot has happened in the bitcoin financial space over the past two weeks, but I’ll do my best to cover the biggest news items.
Price news
The bitcoin price rallied well over the past two weeks thanks to the string of good news and developments in the bitcoin space. In addition to new products and services that look to strengthen the ecosystem (not covered in this article) there are further signs of traditional finance establishments beginning to stand up and listen.
Seven-day average price: $238.16 End of week market cap: $3.4 billion
(Prices quoted according to Coindesk Bitcoin Price Index)
ItBit Receives NYFDS Trust Company Charter
ItBit became the first bitcoin exchange to be given the right to offer exchange services legally across all states in the US. They did this through a ‘backdoor’ of sorts, rather than go through the arduous route of registering as a Money Service Business (MSB) in each state (the route chosen by Coinbase), they chose to register as a trust company in New York, which receives reciprocal rights across the whole country.
US users in any state can now register for an account at ItBit and start trading. Trading volumes look healthy (last 24 hours: ~2,500BTC), but not huge compared to current leading exchanges.
In addition to the big news, ItBit also announced the raising of a further $25m in Series A funding, and the addition of some more heavy-hitters to their board of directors: former Federal Deposit Insurance Corporation chairperson Sheila Bair; former New Jersey Senator Bill Bradley; and former Financial Accounting Standards Board (FASB) chairman Robert Herz.
Having been relatively quiet for some time, ItBit seems to be going from strength to strength and looks to be Coinbase’s main competitor in the US for now.
GBTC Finally Starts Trading
After an anticlimactic launch, OTC trading of the Bitcoin Investment Trust’s GBTC (as reported on 6th April) has finally picked up with trading volumes looking healthy and the GBTC price trading at an equivalent of $490/BTC – a big premium over the actual BTC price!
It looks like a number of traditional investors are excited by the fact they now have a channel for exposure to bitcoin’s price, but how long the enthusiasm can be maintained is another question.
Goldman Sachs Invest in Circle
Wall Street is officially starting to pay attention to bitcoin. Bitcoin wallet company Circle have succeeded in raising a further $50m thanks to a large investment from Goldman Sachs in their latest funding round.
Circle are making steps to move away from purely bitcoin services, and see Bitcoin as a technology to be utilised in the background, rather than to be promoted as currency in and of itself. This has perhaps attracted Goldman to the company, as like many banks they see the blockchain as arguably the more innovative part of the bitcoin technology.
Additionally, Circle announced that they would be looking at ways to expand into the Chinese market in the near future, with help from their other new investor, Chinese venture capital firm, IDG. As someone that operates in the Chinese bitcoin industry, I can confirm that this came as a surprise to many, especially considering China is notoriously such a hard market to crack for foreign tech companies. Circle are a highly professional outfit however, and with the help of IDG if anyone can crack it it’s likely Circle can.
Bitcoin ETN Goes Live
A new bitcoin derivative was approved on 28th April , further expanding the bitcoin investment options for traditional investors. The new derivative is an Exchange Traded Note (ETN) called Bitcoin Tracker One, and will be traded on Sweden’s Stockholm Nadaq from 18th May.
Until now I wasn’t familiar with an ETN, so I found this comparison with the other bitcoin derivatives out there to be particularly useful: http://www.reddit.com/r/Bitcoin/comments/34bity/a_bitcoin_exchange_traded_note_etn_some_technical/
In addition to the expanding investment options for investors unable to purchase bitcoin directly, exchanges are proliferating around the world and I can’t help but observe that if bitcoin ever enters another bubble phase (a big if), the liquidity infrastructure is in place for a much larger number of investors to participate than bubbles gone before.
Follow me on Twitter @nwoodfine
Neil Woodfine is invested in bitcoin. The views expressed above are purely the author’s own and do not represent any organisation. None of the above should be considered as investment advice.
