Australia crypto ETFs go live with a $1.3M volume amid falls

On a tough day for the cryptocurrency market, three crypto-focused exchange-traded funds (ETFs) opened trading on Cboe Australia today. The first cryptocurrency-focused ETFs have begun trading in Australian markets amid a wider market decline that may be the start of another long crypto winter.

Australia’s first three crypto ETFs go live

On 12 May 2022, Cboe Global Markets launched Australia’s first crypto ETFs on its local exchange following a delayed launch. The three funds are 21Shares Bitcoin ETF, Ethereum ETF, and Cosmos Purpose Bitcoin Access ETF. The debut of the three funds in Australia marks the first time crypto ETFs have been made available.

The ETF’s launch was delayed last month as a result of further “checks” that the entity had to complete. Cboe Australia released a statement announcing that standard checks were still underway and that another update would be provided in the coming days. After a lengthy delay, the ETFs were made available on Cboe today.

With the growth of cryptocurrency, providers have been attempting to launch their own ETFs. So far, three ETFs have raised more than $1.3 million combined, and analysts expect that a total of around $1 billion will flow into them in the future. While Australia has been open and receptive to the cryptocurrency sector, the United States continues to shut its doors on such investments firmly.

The Bitcoin Access ETF (CBTC) from Sydney-based crypto investment firm Cosmos Asset Management provides a somewhat indirect approach to BTC. It approximately replicates the performance of the USD denominated ETF non-currency hedged units (Purpose ETF Units) in the Purpose Bitcoin ETF.

ETF Securities teamed up with a major Switzerland-based exchange-traded products (ETP) provider, 21 Shares, to create the other two ETFs. The Bitcoin ETF (“EBTC”) and Ethereum ETF (“EETH”) are the funds’ names. They both track the Australian dollar value of their assets.

The fund of Cosmos Asset Management has made a modest start, with only 51,572 shares changing hands for $398,135. However, given that the firm has waived fees on CBTC for two months to attract institutional interest, activity may pick up soon.

Crypto winter is here

After a week of severe losses, the ETF funds were met with a chilly response as crypto markets plummeted hard on 12 May 2022. The debut of the Aussie ETF takes place on a day when crypto markets have tumbled by more than 15%, losing over $225 billion from global market capitalization.

According to CoinGecko, the overall market cap has dropped to $1.26 trillion, which is its lowest level since July 2021. The cryptocurrency markets have plummeted by almost 60 percent from their all-time high of over $3 trillion, confirming that the crypto winter has arrived and expected a lengthy bear market.

The price of Bitcoin has plummeted more than 10% to $27,836 as of this writing, while Ethereum’s value has plummeted 17% to $1,900 for the first time in ten months.

In the first hour of trade, the Cosmos Purpose fund and 21Shares’ Bitcoin ETF had low trading volumes of about $AU 250,000 ($US 173,000). According to the AFR, the Ethereum fund had volume levels of around $AU 150,000 ($US 103,000). The market capitalization of the three ETFs was roughly equivalent at the start of the day, ranging from $AU 400,000 to $AU 470,000.

Market analysts described the first half-days trading as “somewhat muted” and a “fizzer.” But Dan Annan, the CEO of Cosmos Asset Management, remained calm, stating:

We have seen good reception from the market for day one trading to this point. We’re happy with how the product is trading regarding spreads. However, those investors with long-term views on exposure to Bitcoin and cryptocurrency will understand that this is a good opportunity for an entry point, and therefore, we hope to see an increase in volumes in the days ahead.

Dan Annan.

In an open statement, ETF Securities Chairman Graham Tuckwell also underlined the importance of launching crypto ETFs in a local setting due to the prominence of BTC and ETH.

The market capitalization and trading volumes for these two leading cryptocurrencies are now larger than any company listed on the Australian stock exchanges, yet investors have not been able to gain access to them in a regulated manner.

Graham Tuckwell.

The delayed debut led Cosmos to announce that it would not charge investors fees for the next two months. On Thursday morning at Asia time, when the ETFs began trading, Bitcoin and Ethereum prices were at their lowest since 2022.