Analyzing Bitcoin-Related Funds

ARKW fund

Among the two funds to look at when we read the cryptocurrency market, we have the ARKW fund (ARKW). Its volatility has risen to ~30% as of January 4—compared to 18% at the beginning of December. The price fluctuation in this fund is influenced by the price movement in Bitcoin. The ARKW fund was trading at $48 on January 4. Bitcoin and the ARKW fund have seen a substantial price increase in the last quarter of 2017.

We also have the Bitcoin Investment Trust, Grayscale’s Bitcoin Investment Trust, or GBTC that holds Bitcoin. It trades like an ETF but it often trades at a significant premium to underlying assets.

Analyzing Bitcoin-Related Funds

However, if we look at the year-end rout in Bitcoin’s price, it also took down a few companies that are associated with its price. LongFin (LFIN), Digital Power (DPW), Riot Blockchain (RIOT), and Pareteum (TEUM) also witnessed a slight fall in the price after Bitcoin fell during the last week of 2017.

However, the volatility in Bitcoin could be extended to these stocks. They’re impacted by movement in bitcoin.

Risk or no risk

We have news flooding in from Europe. The ECB’s (European Central Bank) director, Yves Mersch, sounded the alarm on financial institutions investing in Bitcoin futures offered by CBOE (CBOE) and CME (CME). The overall systematic risk in the market would be skewed if major financial institutions, banks, and stock exchanges could participate in blockchain business. As long as it’s kept separate, it could have its gain or loss. However, mixing volatile elements could increase the overall market risk.