We are going to revisit the Lone Gunman Theory of bitcoin where I posited that, given the delayed uptake on the part of institutional investors in the crypto space and the very short term trading nature of most holders, that the Mt. Gox seller was largely responsible for the decline in bitcoin's price.
My hope is that he can be cleaned up quickly. One option would be to have a small number of Silicon Valley based buyers buy the coins. The other option would be a rapid increase institutional investors in bitcoin.
The latter option will eventually happen. Wall Street is coming, we just have to await the infrastructure they need to be put into place. There was some movement on that front yesterday as the CBOE recommends that the SEC allow bitcoin ETFs.
When ETFs happen in this space, it will be a major game changer as it will allow trillions of dollars at investment firms to buy bitcoin for the first time. Timing is still uncertain, but we are moving in that direction. The Bitcoin Investment Trust (GBTC) trades at more than a 50% premium to the underlying value of the bitcoins held by the trust. I think that most people assume that the premium will disappear upon the announcement of an approval of a real bitcoin ETF. I would also assume that the premium disappears because bitcoin rises in price and not because GBTC will collapse.
Notice: This is not investment advice.
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