Bitcoin ETF roars in debut with US$165m of trading volume

The first bitcoin product that's officially labeled an exchange-traded fund debuted on Thursday (Feb 18) in Toronto. PHOTO: EPA-EFE

TORONTO (BLOOMBERG) - North America's first bitcoin ETF got off to a stellar start in its debut, with investors exchanging US$165 million (S$219 million) worth of shares.

After a relentless surge in the world's largest digital currency, the first bitcoin product that's officially labeled an exchange-traded fund debuted on Thursday (Feb 18) in Toronto. It's worth noting, though, that Europe has several crypto-tracking products that function like an ETF. The new fund, called Purpose Bitcoin ETF, invests directly in "physical/digital Bitcoin," issuer Purpose Investments said in a statement.

The cryptocurrency has captivated investors from billionaire Elon Musk to hedge-fund moguls including Alan Howard and Paul Tudor Jones. It may well be "the stimulus asset," DoubleLine Capital chief Jeffrey Gundlach tweeted, in a reference to bitcoin's rally amid a wave of cash pumped into the financial system during the pandemic. While the digital asset has already surged fivefold in the past year - spurring concern about a speculative froth in global markets - it's grabbing more mainstream attention, especially after Tesla's recent US$1.5 billion purchase.

It's unclear how much of the activity in BTCC will result in inflows for the fund, but the trading volumes were well above an ETF's typical first day in Canada, according to Bloomberg Intelligence analyst James Seyffart. Although too early to tell, ETF proponents argue that such a fund will trade without the massive premiums plaguing many current bitcoin trusts in the US.

"There's sizable untapped interest for a Bitcoin investment that has the benefits of an ETF," said Todd Rosenbluth, CFRA Research's director of ETF research, adding it's unlikely the fund will trade at a significant premium-to-net-asset-value. "While most ETFs come to market globally with an educational hurdle to overcome, many investors are familiar with what is inside BTCC," he noted.

The US currently has several active filings for a bitcoin ETF, including the ones from VanEck Associates and Bitwise Asset Management, but the price swings notorious in cryptocurrenies and allegations of industry manipulation remain hurdles to regulator approval. Still, with the world's largest digital trading near all-time highs and a change of leadership at the Securities and Exchange Commission, analysts say the prospect of a first American bitcoin ETF appears to be rising.

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