BTCetc Bitcoin Exchange Traded Crypto surpasses $100m in assets

Nov 6th, 2020 | By | Category: Alternatives / Multi-Asset

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ETC Group’s BTCetc Bitcoin Exchange Traded Crypto (BTCE GY) has surpassed $100 million in assets in a little over four months since its debut on Deutsche Börse.

BTCetc Bitcoin Exchange Traded Crypto surpasses $100m in assets

Bradley Duke, CEO of ETC Group; Hector McNeil, Co-CEO of HANetf.

The Xetra-listed product has powered through the milestone on the back of impressive price performance in bitcoin and strong investor demand, including approximately $6m in inflows in the past two days.

The product, which was brought to market in late June 2020 in collaboration with HANetf, a London-based white-label ETP platform, tracks the price of bitcoin and is 100% physically backed, providing investors with regulated and digitally secure access to the cryptocurrency.

ETC Group and HANetf argue that by purchasing a bitcoin ETP, as opposed to making a direct investment in the cryptocurrency itself, investors can avoid the operational inconveniences of procuring and maintaining a digital storage solution while also benefiting from an additional layer of potential liquidity by way of the exchange listing and secondary market activity.

Alongside this, the sponsors point out that a key feature of BTCE’s proposition is that investors also benefit from central counterparty clearing. BTCE was the world’s first to offer this with reference to bitcoin exposure.

“By reaching the $100 million AUM milestone in just over four months, we feel that the investment community has recognised the quality of BTCE’s investor protections and trading experience.”

– Bradley Duke, CEO, ETC Group.

Central counterparty clearing is potentially very significant, helping to prise open the door to institutional investors which are typically prevented from trading non-centrally-cleared instruments – a restriction that presently precludes direct transactions in bitcoin itself. Clearing through a central counterparty system, as opposed to bilateral settlement, reduces the counterparty risk that market participants are exposed to.

Commenting on the milestone, Bradley Duke, CEO of ETC Group, said, “We worked really hard to engineer a product that provides investors with a safer and more transparent way to gain exposure to bitcoin. By reaching the $100 million AUM milestone in just over four months, we feel that the investment community has recognised the quality of BTCE’s investor protections and trading experience which has resulted in over 1 million shares of BTCE being traded in a single day on Deutsche Börse’s Xetra. Investors also like the optionality of being able to redeem BTCE for actual bitcoin if they so choose.”

With growing numbers of investors viewing bitcoin as a de facto hard currency and potential safe haven, assets under management in BTCE, which currently stand at $107m, look set to climb further. Indeed, at a time of unprecedented expansion of the money supply in currencies like the US dollar, euro, and pound sterling, bitcoin’s investment thesis seems to strengthen every day.

This appears to be playing out with investors, translating into inflows for BTCE.

Commenting on the product’s increasing traction with investors, Hector McNeil, Co-CEO of HANetf, said, “Initially, demand was mainly from the retail space – private investors and the like.

“However, over the last few weeks we have seen a marked uptick in interest from professional investors, most notably private banks and wealth managers but also increasingly institutionally managed UCITS money. Investors like the robustness of the structure for larger positions, especially the central counterparty clearing.”

The ETP comes with an annual fee of 2.00% and is tradeable in euros.

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