Investment Options For Bitcoin High-Rollers Investopedia

Our previous article outlined some of the ways the Average Joe can invest in bitcoin. This time well focus on the big fish. Here are some of the Bitcoin Funds looking to make a splash in 2014. (For related reading, see: Bitcoin Innovations and Obstacles .)

Pantera Capital

Pantera Capital was founded in 2003 by Dan Morehead, who previously worked as a chief financial officer and head of macro trading at Tiger Management Corp. Panteras shareholders include some heavyweights like Benchmark, Fortress Investment Group and Ribbit Capital. For example, Fortress is a global investment firm with approximately $61.8 billion in assets under management as of the end of 2013. According to a December 2013 regulatory filing, Pantera formed a $147 million fund called Pantera Bitcoin Advisors. Since then, it appears that the focus of Pantera Capital has switched solely to bitcoin. The firms About page says the following:

Pantera Capital is an investment firm focused exclusively on Bitcoin, other digital currencies and companies in the space.

Last year the fund invested $9 million in Ripple Labs, a payment system that revolves around Ripples, a cryptocurrency alternative to bitcoin. Pantera also gave $10 million to BitStamp, a bitcoin exchange based in Slovenia. Few months later, BitStamp emerged as one of the winners in the aftermath of the MtGox blowout. (For related reading, see: No Faith in Bitcoin? Profit from Shorting It .)

Pantera Capital offers different investment choices, one of which is an offering that gives investors a 50-50 mix of bitcoin and U.S. Treasuries. While speaking to attendees of the Inside Bitcoins conference held in April, Dan Morehead, Panteras founder and ceo, said this vehicle is a watered-down bitcoin, with fees that are only half that of its regular bitcoin-only offering.

The Bitcoin Investment Trust

On April 10. Barry Silbert, the CEO of Second Market, a full-service bitcoin trading service, and the founder of BIT, made a splash with a tweet announcing that his Bitcoin Investment Trust owned 100,000 bitcoins.

The Bitcoin Investment Trust is only open to accredited investors with a $25,000 minimum investment. The front-end fee is 0.5% and the Annual Administrative and Safekeeping Fee is 2%. Its performance since September 2013 is 286.72% (of course, past performance is not an indicator of future results). Its NAV per share peaked at the start of December 2013 at $110.96. This coincided with the peak in bitcoin prices at over $1,000 per coin. With BTC prices now trading near $500, its not a surprise that the funds share is now down to $49.81. The Trust currently has $53.89 million in assets under management.

While BITs offering is currently restricted to private investors with at least $1 million in assets and an annual income above $200,000, that could change as soon as the fourth quarter of this year. The Wall Street Journal reported that SecondMarket wants to open the fund to ordinary investors. (For related reading, see: Basics for Buying and Investing in Bitcoin .)

The Winklevoss Bitcoin ETF

The Winklevoss twins have been one of the more outspoken believers in bitcoin. In March 2013, the Twins claimed to own 1% of all bitcoins in existence, or around 108,000 bitcoins at the time. Their Winklevoss Bitcoin ETF has been stuck in a regulatory quagmire for the past 12 months. Math-Based Asset Services, a company they own, filed with the SEC back in July 2013. They proposed the creation of a Bitcoin ETF called the Winklevoss Bitcoin Trust. One of the main reasons for the holdup is the fact that the fund will be open to everyone, not just accredited investors. The Winklevoss Bitcoin Trust aims to allow individuals to invest in bitcoin without going through the tedious process of purchasing bitcoins on exchanges and then storing them. The ETF price will be based on a bitcoin price that reflects the volume-weighted average of top exchanges from across the world. On Feb. 19, 2014, the regulatory filling included an announcement of the Winklevoss Index, or Winkdex. The WinkDex is a presentation of global bitcoin pricing and currently uses data from the most active qualified U.S. dollar-denominated bitcoin exchanges. (For more, see: Why the Winklevoss Twins New Bitcoin ETF Matters .)

While the Winklevoss Bitcoin ETF is still stuck in the regulatory approval process, it has been touted by many as a game changer for bitcoin investments. The ETF will trade on the NASDAQ with the ticker COIN. (For more, see: A Bitcoin Tax Guide .)

Disclaimer: This information is intended for informational purposes only. Investing in crypto-currencies is highly speculative. The value of bitcoin and other virtual currencies can go up or down substantially. Always consult with a qualified professional before making any investment decisions.

About the Author: Petar Kotevski is a forex trader and writer with nine years of experience in financial markets. He has been following bitcoin since 2010. Last year, Petar started getting more involved by writing articles for Forex News, on bitcoin and other alternative currencies. New to bitcoin? Check out his Bitcoin Trading Guide. If youre a business owner, you might want to check out his article How to Accept Bitcoin Payments.

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