Please ensure Javascript is enabled for purposes of website accessibility

Why Grayscale Bitcoin Trust Surged Today

By Joe Tenebruso - Apr 29, 2020 at 8:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Bitcoin's price is soaring -- and this cryptocurrency fund is tagging along.

What happened

Shares of Grayscale Bitcoin Trust (GBTC 0.33%) jumped 14% on Wednesday, as the price of bitcoin climbed back above $8,500.

So what

Bitcoin's price appears to be rallying ahead of "the halvening." The halvening will cut the popular cryptocurrency's mining rewards in half, in a process designed to slow the rate of new bitcoin creation until its maximum supply is reached. (Only approximately 21 million bitcoins will ever be created.) The halvening should help to highlight bitcoin's attractive supply dynamics -- at a time when governments around the world are printing their fiat currencies at an unprecedented rate.

The halvening is expected to take place on May 12. 

A miniature gold bull on top of a keyboard button labeled bitcoin.

The Grayscale Bitcoin Trust has delivered strong gains to cryptocurrency investors in recent days. Image source: Getty Images.

Now what

By halving the new supply of bitcoins, the halvening also essentially doubles the cost to produce the cryptocurrency. This helped to drive the price of bitcoin sharply higher after prior halvenings in 2012 and 2016, and it's possible that a similar situation could play out again in the coming months. If it does, the Grayscale Bitcoin Trust could see its share price continue to trend higher.

Joe Tenebruso has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Grayscale Bitcoin Trust (BTC) Stock Quote
Grayscale Bitcoin Trust (BTC)
$15.23 (0.33%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.