On October 19, 2021, the ProShares Bitcoin Strategy ETF (BITO) was launched on the New York Stock Exchange. On day one, the exchange-traded fund (ETF) saw an influx of nearly $ 1 billion in natural volume, and within 24 hours Bitcoin (BTC) itself would hit a new all-time high for its dollar price. Americans. It comes a week after the U.S. Securities and Exchange Commission cleared the ETF’s application to expire, which effectively gave the product clearance to go forward.
This marks a milestone for the United States, but has had repercussions in other markets around the world as well. If BITO continues to be as well received as its first day would suggest, it is likely that more and more people will want to follow suit. The ETF offers exposure to derivatives of Bitcoin futures contracts, not to Bitcoin itself. While purists may find this undesirable, it provides a noticeable degree of isolation for investors from the inherent volatility of Bitcoin. Other products in other markets with similar philosophies could help allay concerns that have held institutional players at bay for years.
Success in a market like the United States certainly sheds a positive light on the prospect of similar funds around the world, and bringing exposure to Australian institutions should be a boon for Bitcoin as well as the national economy. More importantly, it has allowed Australia to take the lead in financial innovation and fully integrate cryptocurrency into its financial herd.
And, for the most part, Australian lawmakers agree. A recent report released by the Australian Parliament’s Select Committee on Australia as a Technology and Financial Center proposed the framework that puts Australia on an equal footing with the US, UK and Singapore.
The ETF domino effect
With this framework in place and following the success of BITO, Australian fund management company BetaShares has launched its Crypto Innovators ETF on the Australian Stock Exchange (ASX) under the ticker CRYP. Exposure to the fund allows investors to follow a variety of crypto-focused companies, based on the Bitwise Crypto Industry Innovators 30 Index. The core portfolio of the index consists of major crypto entities such as the D platform. leading cryptocurrency exchange Coinbase, Bitcoin mining company Riot Blockchain, and business intelligence software company led by Michael Saylor MicroStrategy.
The fund broke ASX records within 15 minutes of launch and has racked up nearly $ 31.3 million by the end of opening day.
Essentially, by owning shares of the company rather than particular crypto assets like Bitcoin and Ether (ETH), BetaShares’ ETF can offer interested clients a unique opportunity to participate in the booming digital asset market without having to buy. physically from crypto directly. In fact, BetaShares claims that 85% of its index looks at companies that derive at least 75% of their income directly from the crypto market, or have at least 75% of their assets in direct crypto holdings. This not only maximizes long-term returns as Bitcoin matures, but also minimizes the shock of a market reversal, which many believe is virtually inevitable.
This has the potential to be transformative for Australia as well as for the wider adoption of crypto. The launch of this ETF gives Australian investors and institutions their first access to Bitcoin, and in a way that should allay their concerns about volatility. This, in turn, will spark more interest in the Bitcoin economy and should help boost the price of the asset. More importantly, it will be another example of this type of product in action which, with any luck, could inspire other markets around the world. That being said, Australia doesn’t need to wait for more comprehensive adoption when it should instead be in the lead.
On a related note, and in Australia’s geographic backyard, New Zealand also saw the launch of its first Bitcoin ETF earlier this month in the form of a new offering called Vault International. Bitcoin Fund, or VIBF. VIBF is made up of carefully selected offshore listed Bitcoin funds and other ETFs. It is the first of its kind to make its way down, which could further encourage regulators who are reviewing the first ETF of its kind in the Australian market.
Related: Australian senators are pushing for the country to become the next crypto hub
What awaits us?
The first crypto-exposed ETF is a big development, but it has to be the first drop of a big bucket. Frankly, the possibilities for crypto funds and derivatives are almost limitless, given the great diversity available. Even without getting into risky small-cap ventures, there are literally hundreds of reputable assets already on the market. Just looking at the best coins like Ether and Solana could be the basis for a variety of fund portfolios, but it’s when you step into top-notch decentralized funding deals that things get really interesting.
Cash mining, staking, and yield farming all have the potential to dramatically increase yields and, when applied correctly, these techniques don’t need to bring too much risk. Stablecoin liquidity pools, for example, mitigate the volatility inherent in the cryptocurrency market while providing higher returns than those found in traditional markets, thus providing investors with a stable and profitable fixed income vehicle to explore. The possibilities for the Australian market are great, and being among the first major regions to engage could actually be a huge boost to the country’s economy. Providing increased exposure to retail products will also be essential in bringing the entire population to support growth.
Related: Regulators are coming for stablecoins, but where should they start?
In the future, if Australia can embrace this new asset class, it could very realistically see an injection of new capital into its markets and into the economy in general, much like what we see in the aftermath. of the American ad. Additionally, it would position Australia as a leader, inspiring other markets to benefit from the massive surge that can come from the implementation of the cryptocurrency and its derivatives. Hopefully those in the power see what’s going on and choose to lean in.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research before making a decision.
The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Does Hamilton is the Head of Commerce and Research at TCM Capital, which provides traditional capital markets and legal advisory services to the digital asset ecosystem. Will has been heavily involved in the cryptocurrency industry since 2016 and, prior to that, worked at Pitt Capital Partners, Washington H. Soul Pattinson’s in-house investment bank, a Sydney-based investment house.