What happened
Grayscale Bitcoin Trust (GBTC 3.24%), an investment vehicle designed to allow investors to indirectly own bitcoin, is moving higher on Wednesday. As of 3:20 p.m. EDT, shares of the fund were up by about 11%.
So what
As you can probably guess, Grayscale Bitcoin Trust is moving higher because the price of bitcoin is rising. Bitcoin has gone up by 38% in the past week and is now trading for more than $8,100 -- the highest price we've seen in months and more than double the lows reached earlier this year.
The main reason for the continued rally seems to be increased demand from institutional investors. There's a rumor that Fidelity is preparing to offer cryptocurrency trading to institutional clients, and Grayscale Bitcoin Trust itself recently reported record inflows during the first quarter, with about three-fourths of the new money coming from institutional investors.
Now what
There are a few things to keep in mind. First, even after its recent rally, bitcoin is trading for less than half of its 2017 peak value of nearly $20,000, so we're still a long way from breaking out to new highs.
And, also keep in mind that while Grayscale Bitcoin Trust's price moves with the price of bitcoin, it's not always a perfect relationship. Specifically, the trust often trades at a massive premium to the value of the bitcoin it owns -- as I write this, the premium sits at about 30%, but has been much higher in the past.