Bitcoin (BTC) Is Propping up Related Securities Following Yearly Highs
Bitcoin (BTC) isn’t the only asset booming from the renewed interest in digital currencies. Three North American securities that deal with bitcoin and blockchain technologies have risen substantially in the last couple of weeks, as reported by AlphaStreet on June 26, 2019.
Macro Bull Run
As expected, the bullish sentiment in bitcoin has helped related crypto securities in traditional markets surge as a by-product of bullish price action after nearly a year. When bitcoin broke $6,000, many analysts saw this as a significant threshold for a positive move to continue.
Once the critical resistance at $7,700 and the psychological region of $10,000 were blasted through, the genesis cryptocurrency began attracting mainstream interest once again.
The next resistance after closing above $11,700 is reportedly near the $17,000 region.
Three securities have joined bitcoin including Grayscale Investment’s BTC Trust, Riot Blockchain, and Marathon Parent Group. Grayscale needs no introduction; they are digital currency pioneers in their own right, bringing bitcoin to the mainstream through traditional OTC markets.
Riot Blockchain was a biotech company called Bioptix that changed its focus and name after acquiring Canadian exchange Coinsquare. Marathon focuses on the mining of digital currencies and made a name for themselves by opening mining facilities in Canada.
Grayscale’s BTC Trust is trading at a premium for its liquidity and ease of access to retail participants. The process of buying into a trust on NASDAQ is much more comforting for investors, bypassing the self custodial model of bitcoin.
Riot and Marathon were beaten down during the bear market, so it only makes sense that they join in on the bull market.
Grayscale ETH Trust Drastically Overvalued
The bullish run from these securities does, however, come with a word of caution. As pointed out by a user on SeekingAlpha, the Grayscale ETH product is trading at a 350 percent premium to the spot price of ETH. This exuberance is likely to be a result of the recent listing and access to customers but is nevertheless dangerous for retail investors.
A premium on Grayscale products can be justified through transactional and custodial costs, as well as ease of access. A 350 percent premium, however, is perilous to retail investors as it can lead to massive losses.
It wouldn’t be far fetched to say the Grayscale Investment products are slightly bubble-like. Even if the price were to average out now, it would cause disastrous losses to those who invested at product launch.