Success of Canadian bitcoin ETF highlights the bull case

Author: Adam Button | Category: Cryptocurrency

Bitcoin hits a record $54,000

Bitcoin hits a record $54,000
The case for bitcoin to $100,000 this year rests squarely on the ETF market.

If Canada is any indication, hitting those lofty heights is a foregone conclusion and there's maybe more.

A physical bitcoin ETF launched yesterday in Canada as the Purpose Bitcoin ETF (BTCC.B and BTCC.U) and it was very well received. In fact, it was the most-traded ETF in the country on day one.

It launched with about 85 bitcoin and 250k shares outstanding, giving it just a 2.67m market cap. That's a modest number but volumes were very high with 20 million shares traded, or $209m. We're approaching another 17m shares traded already today.

What's encouraging is that the ETF finished yesterday with about a 2.3% premium to net asset value. That's far better than the 80% premiums we've seen in OTC products like the Grascale trust in the US in its first six months and 7.5% currently.

I think 2.3% plus a 1% annual management fee is completely reasonable to the ability to exchange-trade bitcoin and it comes along with other benefits like being able to own it in tax-advantaged accounts. The main feature for the broader bitcoin market is to attract investors who don't want to go through the hassle of setting up and funding a crypto account.

The interest in this ETF will be worth watching closely because a US ETF is undoubtedly coming and it's a full-on sprint. Another one launched today in Canada (EBIT) and more are in the pipeline there as well.

Given what we've seen from Canada so far, I hesitate to put a cap on how high bitcoin could go.

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