What Spot Bitcoin ETFs in Canada Say About the U.S.
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What Spot Bitcoin ETFs in Canada Say About the U.S.
Competitive price pressures drive markets, whether these traditional investment products are in Canada or the U.S., Reza Akhlaghi writes.
Canada has unveiled new bank-capital plans for crypto (Pixabay)
Canada has unveiled new bank-capital plans for crypto (Pixabay)
By Reza Akhlaghi
AccessTimeIconFeb 27, 2024 at 3:37 a.m.Updated Feb 27, 2024 at 3:39 a.m.
On Jan. 10, the U.S. Securities and Exchange Commission (SEC) ended the years-long wait for spot bitcoin exchange-traded funds (ETFs). The approval, an important phase in the maturation of Bitcoin, opened the door for millions of Americans to invest in the incumbent digital currency, whose value grew by more than 160% in 2023.
Reza Akhlaghi is a digital marketing and Web3 consultant based in Toronto, Canada.
Futures-based crypto ETFs have been available to U.S. investors since October 2021, but unlike spot ETFs, they are not tied directly to the asset and have no requirements for custody. In other words, if spot ETFs are successful, it means there will be a lot more bitcoin buying pressure.
In addition to institutional and retail buyers, there are private bankers, investment advisers, wealth managers and robo-advisers adding to the dynamics of the spot bitcoin ETF. These investment managers now have access to a crypto product that is liquid, safe, and does not require custodianship or reporting. Investors rely on the ETF issuer to accurately track the performance of the underlying asset.
As of last week, at least $7.7 billion has flowed into the 10 live spot bitcoin ETFs in the U.S., a figure that Sylvester Flood, senior product manager for Morningstar, called a “big success.” It isn’t yet clear whether this pace of adoption will continue — and so it might make sense to look at markets where ETFs have traded for years.
