On October 19, 2021, ProShares Bitcoin Strategy Exchange Traded Fund (BITO) was launched on the New York Stock Exchange. On the first day, the exchange traded fund (ETF) raised almost $ 1 billion of normal volume, and within 24 hours, bitcoin (BTC) itself will reach a new all-time high for its USD price. This came a week after the US Securities and Exchange Commission allowed the ETF to expire, and in fact gave the product approval.
This was an important step for the United States, but it also caused fluctuations in other markets around the world. If taking BITO continues as the first day dictates, more and more people will probably follow. The ETF offers access to derivatives from bitcoin futures instead of bitcoin itself. While purists may find this undesirable, it provides a significant degree of investor protection against Bitcoin’s inherent volatility. Other products in other markets with a similar philosophy can help allay fears that have kept institutional players in check for years.
The success story of a market like the US certainly sheds a positive light on the potential of similar funds around the world, and the opening of Australian institutions is a boon for both Bitcoin and the country’s economy. More importantly, it has given Australia the opportunity to lead financial innovation and fully incorporate cryptocurrency into its financial flock.
Australia’s legislators largely agree. A recent report released by the Australian Parliamentary Committee on Australia as a Technology and Financial Center proposes a structure that puts Australia on an equal footing with the United States, the United Kingdom and Singapore.
By establishing this structure and following the success of BITO, the Australian fund manager BetaShares launched the Crypto Innovators ETF under the ticker CRYP on the Australian Stock Exchange (ASX). The fund’s exposure allows investors to track multiple cryptocurrency-focused companies based on the Bitwise Crypto Industry Innovators 30 index. The underlying portfolio of the index consists of large cryptocurrency companies such as the famous cryptocurrency exchange Coinbase, bitcoin miner Riot Blockchain and analysts for business software development at MicroStrategy led by Michael Saylor.
The fund broke ASX records within 15 minutes of launch, raising nearly $ 31.3 million by the end of its opening day.
Essentially, by owning shares in a company instead of specific cryptocurrencies such as Bitcoin and Ether (ETH), BetaShares ETFs can give interested customers a unique opportunity to participate in the fast-growing digital asset market without having to buy cryptocurrency directly. In fact, BetaShares claims that 85% of the index is attributed to companies that receive at least 75% of their income directly from the cryptocurrency market or that alternatively own at least 75% of the assets directly in cryptocurrency holdings. This will maximize long-term profits as Bitcoin matures, but will also reduce the shock of a market turnaround, which many believe is almost inevitable.
This potentially changes both Australia and the wider use of cryptocurrency. This ETF launch offers Australian investors and institutions their first access to Bitcoin in a way that will allay their concerns about volatility. This in turn will increase interest in the bitcoin economy and help drive up the asset’s price. More importantly, this will be another example of this type of product in action that, with a little luck, can inspire other markets around the world. However, Australia does not have to wait for a broader global adoption; instead, it must become a leader.
Similarly, in Australia’s backyard, New Zealand also saw the launch of its first Bitcoin ETF earlier this month in the form of a new offering called the Vault International Bitcoin Fund, or VIBF. VIBF consists of offshore bitcoin funds and other carefully selected ETFs. This is the first fund of its kind to have bottomed out, which may inspire regulators to test the first such ETF in the Australian market.
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What does the future hold for us?
The first crypto-ETF is a good development, but it should be the first drop in a big bucket. Frankly, the opportunities for cryptocurrency funds and derivatives are virtually limitless given their enormous variety. Even without participating in small, risky ventures, there are already hundreds of reputable assets on the market. Just take a look at top coins like Ether and Solana, which can be the basis for various fund portfolios, but when you get into large decentralized financial offerings, things get very difficult.