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Bitcoin Braces For A Shock $500 Million Earthquake

Bitcoin and cryptocurrency markets have swung wildly over the last week with the bitcoin price briefly nudging its 2017 all-time high.

The bitcoin price climbed to around $19,500 per bitcoin last week before a sharp correction saw it fall as low as $16,000.

Now, the bitcoin price has bounced back, giving a boost to other major cryptocurrencies, after a $200 billion asset-manager revealed it could “seek investment exposure to bitcoin indirectly” to the tune of $500 million via the Grayscale Bitcoin Trust (GBTC).

“The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (‘GBTC’), a privately offered investment vehicle that invests in bitcoin,” Guggenheim Partners wrote in a filing with the U.S. Securities and Exchange Commission on Friday.

Guggenheim’s Macro Opportunities Fund has around $5 billion in net assets, meaning it could invest as much as $500 million in the Grayscale’s bitcoin investment vehicle—but will steer clear of direct bitcoin or cryptocurrency exposure.

“Except for its investment in GBTC, the fund will not invest, directly or indirectly, in cryptocurrencies,” the filing read.

The Grayscale Bitcoin Trust allows investors to trade shares in a fund that holds a large amount of bitcoin, with Grayscale launching several other cryptocurrency-backed trusts since debuting its flagship bitcoin fund in 2013. Investors buying shares in the Grayscale Bitcoin Trust gain exposure to bitcoin without having to go through the tricky process of buying and holding large amounts of the cryptocurrency themselves.

However, shares in Grayscale’s trusts often trade at a premium to the underlying asset and some have warned that investors may not realise the extent of the premium they’re paying.

Meanwhile, Guggenheim’s filing outlines a variety of risks it associates with bitcoin and cryptocurrency investment, including “highly volatile” prices, the “largely unregulated” nature of many crypto exchanges, and an uncertain regulatory outlook.

“Cryptocurrency is a new technological innovation with a limited history; it is a highly speculative asset and future regulatory actions or policies may limit, perhaps to a materially adverse extent, the value of the Fund’s indirect investment in cryptocurrency and the ability to exchange a cryptocurrency or utilize it for payments,” the filing read.

The New York-based Guggenheim Partners is the latest in a growing line of Wall Street giants, high-profile investors, and technology companies to show interest in bitcoin and cryptocurrencies this year.

Bitcoin’s growing reputation as digital gold and as an emerging hedge against inflationhas propelled the bitcoin price to near-three year highs of almost $20,000 per bitcoin this month.

The November bitcoin price rally was sparked by payments giant PayPal PYPL +1.3%announcing it planned to add bitcoin buying and spending services, along with a handful of other major cryptocurrencies, with many in the bitcoin and cryptocurrency community counting PayPal’s acceptance of bitcoin as a long-sought victory over the established financial services sector.

This article is from Forbes online.