XBT Provider, a Swedish company that has launched the world’s first Bitcoin-backed instrument on a regulated exchange (Nasdaq Nordic) is planning a global expansion following its success in the Scandinavian region.
The firm manages two Bitcoin instruments called Bitcoin Tracker One and Bitcoin Tracker Euro. The latter was launched with the approval Sweden's financial supervisory authority, Finansinspektionen, on October 5, 2015, for the purpose of mirroring the return of the underlying asset, U.S. dollar per Bitcoin.
Bitcoin Tracker Euro as an exchange-traded note (ETN) has since become increasingly popular among investors on the Swedish regulated exchange, securing the title of the most traded ETN on Nasdaq Nordic.
With the explosive growth and increase in interest in Bitcoin ETNs, the XBT Provider team unveiled the company’s plans for global expansion of their Bitcoin instruments in an exclusive interview with Bitcoin Magazine.
Success of Bitcoin ETNs and Instruments
Bitcoin ETNs and instruments, including the Bitcoin Tracker Euro and GrayScale Investment’s GBTC, have performed exceptionally well against major reserve currencies and global asset classes since mid 2015. Currently, a share of GBTC is being traded at $57.40, and since a share of GBTC guarantees investors about one tenth of a bitcoin, investors are purchasing Bitcoin using GBTC at an average price of $602.71 per coin. That is a premium almost 40 percent higher than the actual price of Bitcoin.
The XBT Provider team explains that a few key factors have played a vital role in the increase in demand for exchange-traded notes and Bitcoin instruments in the past year. Speaking about the deman, XBT Provider Marketing Manager Christoffer De Geer said:
“Since early 2015, with the exception of Mike Hearn’s controversial resignation, the Bitcoin industry has received more positive news coverage from both Bitcoin and mainstream media outlets. The Bitcoin industry has seen emergence of an increasing number of startups and applications utilizing micropayments to offer real-world applications such as remittance and online incentive services, leading the general population ... to recognize the practical usages of Bitcoin transactions. More importantly, the price volatility of Bitcoin has substantially declined and the liquidity of Bitcoin has risen in regions including Europe, the U.S. and Southeast Asia.
“Another major factor is the decline in global asset classes, commodities and stocks, and the rising fear of investors for global economic slump.
“External factors might have helped as well. The Chinese stock market crash, the devaluation of the [Chinese] renminbi, the standoff between the E.U. and Tsipras in June. All these events have led to increased press coverage for Bitcoin focusing on critical advantages with Bitcoin compared to fiat currencies. We do not believe that the ongoing blockchain craze has done much good for the Bitcoin price yet, but we believe the that the private blockchain hype will translate to higher Bitcoin prices at a later stage.”
Recognizing the underwhelming performance of major stock exchanges and assets, Legendary Swiss investor Marc Faber said, “When you talk about doom and gloom for this year, 2016, I have to point out that in 2015, with the exception of people that held bitcoins, the performance of all asset classes has been poor.”
With hopes to recover from their losses, a large number of investors in the traditional finance sector have begun to shift their focus toward secure investments in Bitcoin that can eliminate the possibility of potential hacking attacks which could result in the loss of client funds. Thus, instead of purchasing Bitcoin at highly liquid Bitcoin exchanges, traditional investors prefer to purchase Bitcoin using Bitcoin instruments like GBTC and XBT Provider’s ETNs, which guarantee the ownership of Bitcoin.
But XBT Provider states that GBTC is not a real financial instrument, as it offers trades at a premium to the actual Bitcoin price. According to De Geer:
“XBT Providers ETNs listed on Nasdaq Nordic are the only exchange-listed instruments we know of besides BIT’s [Bitcoin Investment Trust] listing of GBTC. In comparison, GBTC is not a ‘real’ financial instrument of which they momentarily can issue more with increasing demand. XBT Provider’s ETNs are still the only Bitcoin instruments that consistently trade at fair value and not at a premium to the actual Bitcoin price.”
As the XBT Provider plans for global expansion, the team is looking forward to securing larger investments from institutional clients, and hoping to achieve new milestones throughout 2016.
“We do have alternative investment hedge funds and insurance companies as investors and predict larger investments from more institutions in 2016, as more asset managers start to feel comfortable with Bitcoin,” a team statement said.