The world’s first Bitcoin exchange-traded fund (ETF) achieved great success in the first week of its issuance. Data from Glassnode shows that Purpose, the fund issuing company, already holds more than 10,000 bitcoins, with 10,064 bitcoins as of press time.
Canadian company Purpose Investments is the first company to launch a Bitcoin ETF in the North American market. The trading code of this ETF is “BTCC” and it is traded on the Toronto Stock Exchange. On the first day of issuance, it broke the transaction record of nearly 400 million U.S. dollars, making it one of the top five ETF listed companies in the North American market.
The company’s chief investment officer Greg Taylor believes that the huge demand for Bitcoin ETFs proves that market demand has been suppressed.
In an interview with Yahoo Finance, Bitcoin ETF Greg Taylor stated that his company has the advantage of being open to ordinary investors. Other similar products, including Grayscale’s Bitcoin Trust, are closed-end and only serve institutional investors.
He said: “A lot of people want to get in touch with Bitcoin, but they don’t really want to do so by opening their own accounts or their own wallets, and they don’t have the willingness to trade some other closed-end funds. I think that ETFs give investment in Bitcoin Coin has opened up a good choice, and we are very happy to see its transactions, but also to see some results brought about by pent-up demand.”
Taylor further revealed that the demand for BTCC is distributed all over the world. “For ETFs, it is difficult to find the exact source of funds, but many people have expressed their hope to obtain this product from all over the world.
Purpose’s Bitcoin ETF has begun to cause waves in the market, even though it has only been issued for a week. One effect is the gradual cooling of investor interest in GrayScale’s Bitcoin Trust. For the first time in five years, trust fund shares have been traded at a discount.
GBTC’s share price plummeted by 22% yesterday and was 3.8% lower than the trust’s basic holding value at the close. Since its launch in 2013, the company’s stock price has been at a premium. This premium was as high as 132% when it peaked in May 2017. In mid-2020, this premium is also as high as 40%.
Nate Geraci of ETF Store, a Bitcoin ETF consulting firm, believes that this situation is due to the rise of competing products.
He told Bloomberg “Since the beginning of this year, we have seen the launch of a variety of competing products. This is not good news for GBTC investors. Competition has weakened investor demand for the product, which may lead to a sharp drop in premiums. There are even discounts.”
In Canada, the popularity of Purpose’s Bitcoin ETF is forcing its competitors to lower their fees to compete. Canadian asset management company Evolve Funds Group is the second company to launch a Bitcoin ETF, and its product debuted a day after Purpose’s ETF was launched.
But when Purpose’s ETF broke the $600 million record, Evolve’s ETF only attracted $28 million in funds, forcing it to lower its fees to attract investors.
Evolve reduced the management fee from 1% to 0.75%.
Its CEO Raj Lala pointed out that “Today, we are happy to provide investors with the most cost-effective Bitcoin ETF. Our Bitcoin ETF allows investors to access physical Bitcoin in a fully regulated manner in their brokerage accounts.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.