'Bitcoin is here to stay'. A crypto CEO breaks down why sell-offs won't slow the boom in investment that is only just getting started

  • Osprey Funds founder Greg King says consolidation in the bitcoin price are normal after large moves.
  • King is long-term bullish on bitcoin and says recent volatility won’t stop its wholesale adoption.
  • He also breaks down his low-cost investment trust that aims to compete with Grayscale.
  • Visit the Business section of Insider for more stories.

It’s been a volatile couple of weeks for bitcoin investors after the price dropped by more than a quarter from highs of around $54,000 to $45,000 in just one week. This was following a stellar 206% surge from December 1 to February 21.

The price now continues to fluctuate between $48,000 and $50,000.

High volatility followed by periods of consolidation is expected with bitcoin, said Greg King, founder and CEO of Osprey Funds, a firm that recently launched a new bitcoin trust.

“If you look at it from that point of view, and take previous all-time highs that persist for 200 days, there’ve only been three or four of those,” King said. “And each time, bitcoin rallies on average around 900% versus the previous high, with quite a broad range 400% to 1,500%.”

Bitcoin’s volatility didn’t stop King from launching the Osprey Bitcoin Trust (OBTC) on February 18. King is in it for the long haul. He believes bitcoin will eventually substitute gold in people’s portfolios, rather than currencies, but is reluctant to offer a price forecast.

“It’s difficult to picture the end-point, I think we’re a little more comfortable focusing on the current bull market and just generally being long term bullish,” King said.

What is a bitcoin investment trust?

Bitcoin investment trusts purchase bitcoin and hold it. Investors buy shares in the trust to gain exposure. The shares are bought at net asset value and have lock-up periods between six to 12 months.

The most well-known is the Grayscale Bitcoin Trust (GBTC), founded in 2013, with around $31 billion assets under management with access only available to accredited investors.

OBTC has $90 million assets under management and allows accredited investors to buy directly into the trust and enables retail investors to buy in the secondary market.

“If [investors are] buying in the secondary market, they should pay attention to the price they’re paying, make sure they understand premiums and discount potential for those,” King said.

Osprey aims to be the cheapest trust on the market with a yearly 0.49% management fee. Grayscale, in comparison, charges a 2% fee.

Right now, these investment trusts are the only way US investors can hold bitcoin without needing to maintain digital wallets, or having to store private keys. 

That is, until bitcoin exchange-traded funds become available, which would offer investors a low-cost and accessible way to gain exposure to bitcoin.

What about a bitcoin ETF?

Canadian regulators recently approved the first North American Bitcoin ETF, which now has over $600 million assets under management since launching on February 18,

Some investors expect the US Securities and Exchange Commission to follow suit, after years of rejecting proposals. 

Investors believe a combination of factors could lead to the approval of a US ETF, including the recent increase in  institutional adoption of bitcoin, new SEC leadership under President Joe Biden’s nominee Gary Gensler and  approvals in other countries.

Part of King’s bullishness comes down to his experience in the ETF industry, where he launched over a 100 products. He doesn’t expect to see the approval of a US ETF to happen this year.

“I expect that [Gensler] will be thorough and cautious about how he approaches this,” King said. “Next year? Sure there’s a possibility but even then I think there’s still some significant hurdles to overcome but I think we’ve probably taken a step closer to some of the changes and the increase of institutional adoption.”

But when the time comes, King would consider converting the trust to an ETF and it’s something his team is watching closely.

However for now, the team is focused on providing an additional option in the bitcoin investment trust space.

“We feel that it’s an option that’s at a lower cost, and also diversified in terms of working with an alternative custodian, [Fidelity Digital Assets] that is one of the biggest names in investing in the US.”

Whether there is room for both Grayscale and Osprey? King thinks so. 

“We think we can happily coexist,” King said.

Long-term outlook

Bitcoin is here to stay, King said. 

“I think we’re bullish on Bitcoin for 2021, many factors pointing in the same direction there,” King said. “Bitcoin tends to lead the crypto market, so by extension, we’re generally bullish on the crypto market, although that’s less of a conviction.”

Society is still in the midst of an adoption curve and there is still a fair amount of room to grow, King said.

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