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Bitcoin’s overall market value rose to over $1 trillion on Friday, as a combination of institutional buying and speculative hype has repeatedly vaulted the digital asset to new highs this year. Each Bitcoin was worth $55,400 around 2 p.m. ET. It’s up 86% on the year.
The surge of enthusiasm for Bitcoin is coming from all corners. Corporations like
Tesla
(ticker: TSLA) and software company
MicroStrategy
(MSTR) have bought it for their treasuries; financial companies like
Bank of New York Mellon
(BK) are planning to hold it for customers; and retail investors are able to buy it easily on financial apps like
PayPal Holdings
(PYPL) and Robinhood.
Asset managers and providers of exchange-traded funds providers are creating more ways to buy Bitcoin for those who want to trade through their brokerage accounts, rather than buy on an exchange or hold the coins themselves. Investment firm Purpose Investments launched the
Purpose Bitcoin ETF
(BTCC.Canada) on Thursday on the Toronto Stock Exchange. Nearly 10 million shares were traded on its first day, making it one of the highest-volume securities in Canada. Many Americans can’t buy it through their brokerage accounts, though.
Charles Schwab
(SCHW), for instance, allows customers to trade Toronto-listed securities, but not non-U.S.-exchange-traded products such as Canadian ETFs.
There is no U.S.-listed Bitcoin ETF, but there are an increasing number of securities structured as trusts that trade on public markets. The largest of those is the
Grayscale Bitcoin Trust
(GBTC), which now has nearly $40 billion in assets. Another one that recently launched is called the Osprey Bitcoin Trust (OBTC). Those trusts, unlike ETFs, can trade at a large premium to their net asset values, so they have added risk.
One question now is whether Bitcoin will maintain its momentum or whether other digital assets could steal its thunder. While Bitcoin is unique in that its supply is capped, and it has gotten support from regulators, other coins may end up being more useful.
One prominent investor in the space thinks Bitcoin will keep rising, but also expects that some other digital assets will rise even more. Dan Morehead, founder of Pantera Capital, started the first hedge fund to invest directly in Bitcoin in 2013. He has other funds investing in other parts of the crypto ecosystem too.
“It’s our view that Bitcoin is going to go up a lot over the next few years,” he said in a recent interview. “But Ethereum and Polka Dot are going to go up even more. And then the tokens built on top of those protocols will go up even more than that.”
Ethereum is the second most valuable cryptocurrency, and has unique programming capabilities. Polka Dot allows people to transfer assets from one blockchain to another.
Write to Avi Salzman at avi.salzman@barrons.com