What are Bitcoin Trust Funds and How Do They Work?



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Bitcoin’s rise to fame was triggered by the bull market phase, which had a great impact on Bitcoin price. Namely, the price of Bitcoin had recently surpassed $60,000, while it has a continual growth since 2020, with many notable records including a price of $20,000 in December.

This has resulted in an ever-rising number of retail and institutional investors. In fact, the demand from institutional investors that include crypto and Bitcoin trust investment funds only moved the price further. If you also want to get BTC, here we explain what the advantages of investing through investment trust funds are.

Bitcoin investment trust funds

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Before we dive in, we will explain what Bitcoin and Bitcoin investment trust funds are. Bitcoin is a completely virtual cryptocurrency that is used as a decentralized medium to exchange funds over a peer-to-peer blockchain network. Its value is based on the demand and supply in the market, and hence, as the demand is increasing on a global scale, the price is also rising.

Bitcoin investment trust fund works like other investment trust funds. Generally, a crypto trust fund is a publicly listed financial institution that invests in financial assets on behalf of its investors.

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When you’re investing in BTC through investment trust funds, you are essentially buying Bitcoin’s share. As an investor, you don’t need to bother with researching about crypto or finding secure means of storage. All aspects of the trading and the storage of your funds are entrusted to the trust funds.

Of course, that comes with a price based on the size of your investment and the politics of the crypto trust fund. For example, Grayscale Investment Trust, which is a well-known Bitcoin trust fund, charges an annual fee of 2% of the fund’s assets. In other words, this means if you have invested in 1 Bitcoin, over time, the value will decrease to 0.092 because there are fees associated with the services offered by the crypto trust fund.

If you want to invest in BTC directly, there is an abundance of trading sites like Bitqs, for example, which is a top automated trading site. You can sign up for free to find out more about the automated system, how it works, and how you can register on the site.

Otherwise, the platform utilizes high-end AI technology, which conducts all trading automatically for you. In terms of trading, the environment is fully safe and transparent, so you can rest assured that your data is safe here.

Pros and cons of investment trust funds

The main advantage is that it is much more convenient to invest through an investment trust fund, especially for institutional investors. For individual investors, it might be too expensive, especially if they want to make long-term investments. The main advantage is that the value of Bitcoin tends to rise in Bitcoin Trust Funds when the price of Bitcoin increases. For example, in 2018, the share of the Grayscale Bitcoin Investment Trust was trading at a price of $7.95, which was over 20% higher than the general price of Bitcoin.

But, whether the price of the shares declines or rises higher than the general price of Bitcoin it is mainly affected by the number of investors that are buying BTC through the fund. In other words, it is possible for a Bitcoin trust fund to sell shares at a price 42% higher than the current Bitcoin’s worth.

But, when the price decreases, the trust might close with a much lower price than the value of Bitcoin. So, it’s up to you to make a cost-effective analysis when it comes to investing in BTC, whether through an online trading site or investment trust funds. Make sure to take into consideration the fees you will need to pay, the reputability of the institutions, and other factors that are relevant to your financial goals.

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