Robert Steinadler, 10 months ago
Let’s face it: this week has been a catastrophe for the market in terms of price and stability. While most investors and traders are busy figuring out how to play this market during difficult times it seems that they are missing out on the positive news of the day. Today, the first crypto ETFs start trading in Australia despite the market conditions.
What are Bitcoin and crypto ETFs, what are they good for and why could they become important in the future?
There are three crypto ETFs that started trading today in Australia. The ETFS 21Shares Bitcoin ETF, ETFS 21Shares Ethereum ETF, and the Cosmos Purpose Bitcoin Access ETF. All three ETFs started with a slight delay and were initially planned to start trading at the end of April. The products had to go through several checks by Cboe Australia but eventually received a green light for the start.
Both ETFs issued by ETFS will invest directly into the assets in question, while Cosmos, the company behind the third ETF will invest in the Canadian Purpose Bitcoin ETF. At the end of the day, that only makes a slight difference, since the Canadian Purpose Bitcoin ETF purchases BTC from Genesis as its liquidity provider.
This is great news because in other countries Bitcoin ETFs are still under regulatory scrutiny. For the last 4 years, the SEC is rejecting Bitcoin ETFs that aim to invest directly into the asset, while allowing Bitcoin ETFs that rather invest in Bitcoin futures.
The answer to this question is relatively simple: The Australian ETFs are buying Bitcoin directly from the market. At the same time, they open up access to the crypto market which is too complex for some investors to navigate.
Others might be more concerned about taxes or other factors that come into play if an investor just wants the exposure to crypto but does not need to get in touch with its potential by holding the coins himself. It is believed that if ETFs become more available that more capital will enter the market and funds need to buy and hold assets like Bitcoin and Ethereum for their customers.
This could possibly increase the demand for crypto over the next 5 years or so which is usually seen as an event that is fundamentally bullish. Of course, the start of a spot ETF in the US would create even more impact than the start that we just have witnessed in Australia.
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