"It's entirely usual. It's fallen 90 per cent several times and then recovered to jump thousands of per cent," he said.

"The only difference now is that people know about it. Looking at the history of bitcoin the volatility has been falling through time, as are the returns, believe it or not."

XBT is raising a minimum of $30 million through the float at $1 per share and will lodge its prospectus mid-next week.

Trading remains low

The company will trade futures on the Chicago Board of Exchange and Chicago Mercantile Exchange. Both these exchanges launched bitcoin futures contracts in December, but so far the trading volume has been relatively low, relative to the hype surrounding bitcoin, in part due to the Christmas period.

The listing of XBT Investments comes as more and more venture capital funds have started targeting cryptocurrencies. Bloomberg

Mr Davis, who also founded fintech startup Sell My Shares, said XBT Investments would be targeting stockbrokers, believing their clients were increasingly keen to get exposure to crypto assets.

"We solve a real problem for them. Just about any stockbroker will tell you they're getting a barrage of calls asking how to get involved in bitcoin," he said.


The listing of XBT Investments comes as more and more venture capital funds have started targeting cryptocurrencies.

Asset managers seek millions

Apollo Capital, Cloudbreak Asset Management and EKT Active Fund are all dedicated to cryptocurrency investments and initial coin offerings. EKT, which has recruited Damien Hatfield of Triple A Partners and the former head of global markets for ANZ Bank, Steve Bellotti, is in the process of raising $50 million, while Apollo Capital is set on raising a minimum of $30 million.

On Tuesday, listed investment company First Growth Fund also announced a $3.45 million share placement to expand into blockchain. Blockchain Global, which operates the country's largest crypt currency exchange ACX.io, as well as a management consulting division, is leading the placement.

The shares in the placement are being issued at 1.2¢ a share and the business says it will provide working capital, in addition to facilitating acquisitions or investments in blockchain "technology, assets and businesses".

As well as trading in bitcoin futures, Mr Davis has plans to launch a second investment company through BitFunds on the National Stock Exchange, which will own cryptocurrencies ranked in the top 10 by valuation, excluding bitcoin.

To do this Mr Davis is working with a cyber security firm to ensure its digital wallet would be secure. There have been issues with digital wallets being hacked, with even Apple co-founder Steve Wozniak having his bitcoin stolen.

Hacking remains a risk


Mr Davis was concerned if XBT owned the currency, rather than trading it futures, it would have been a target for cyber criminals due to the value of bitcoin it would hold.

"There are ways to manage the risk of hacking, but they are complex and expensive to implement. It becomes a honey pot for hackers in the scale that we're talking," he said.

"There are also complexities in dealing in the market on volume. There is no one centralised exchange by the very nature of cryptocurrencies. There are a lot of liquidity pools around, rather than one centralised pool, which can make it harder to get the trade away when dealing with significant sums of money."

Mr Davis has recruited former Resource Super chief executive officer Tim Baker to join the board of XBT Investments, along with Ventnor Capital partner Morgan Barron.