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Cryptocurrencies in ETP form see return to favour and arrive in Australia

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Last week saw Australia launch spot bitcoin ETFs, with Matteo Greco, Research Analyst at Fineqia International, writing that Monochrome Asset Management, the issuer, obtained approval for its BTC Spot ETF (IBTC) in April, and launched its product on Cboe Australia, after obtaining the green light from the Australian regulator.

Greco writes that these recent developments underscore the global demand among traditional finance investors to diversify their portfolios by increasing exposure to digital assets. “The approval of BTC Spot ETFs in the US earlier this year paved the way, followed by similar product launches for BTC and ETH in Hong Kong. Additionally, news of ETH Spot ETF approval in the US and BTC Spot ETF trading in Australia further highlights the industry’s momentum.”

The week saw bitcoin at approximately USD67,800, representing a 1.1 per cent decline from the previous week’s closing value of around USD68,500. The week was characterised by low daily volatility, with the price fluctuating by less than USD4,000 even when analysing intraday trading levels, Greco says.

However, during the past week, BTC Spot ETFs experienced gradual and consistent inflows, he reports. Over the four trading days, the cumulative net inflow totalled approximately USD170 million. This marks the third consecutive week of positive flow, signalling a reversal in trend after five weeks of subdued demand. In total, BTC Spot ETFs have witnessed 14 consecutive trading days of net inflow, with the overall net inflow since inception approaching nearly USD14 billion.

Another significant development occurred last week in the BTC Spot ETF landscape. Blackrock Bitcoin ETF (IBIT) now officially holds more BTC than Grayscale’s ETF (GBTC). GBTC had previously operated as a trust before transitioning to an ETF in January 2024. Both ETFs currently manage over USD19 billion in assets, with IBIT holding approximately USD19.7 billion and GBTC closely trailing at around USD19.2 billion, Greco says.

“Demonstrating the growing interest and commitment from traditional finance players in the digital asset space, additional milestones were achieved recently. Firstly, the SEC approved Ethereum (ETH) Spot ETFs, which are poised to begin trading once the SEC greenlights the S-1 filings, after approving the 19b-4s about 10 days ago. Both the 19b-4s and the S-1s must be approved by the SEC for the launch of Spot ETH ETFs.

“The 19b-4s filing allows national security exchanges (e.g., NYSE or Nasdaq) to list new products, such as Spot ETH ETFs. The S-1s are the initial registration forms required for new securities offered to the public, providing detailed information about the company’s operations and products. Market participants anticipate that trading for ETH Spot ETFs will commence either in July or August 2024, based on the current available information.”

CoinShares reports that Ethereum enjoyed a turnaround in sentiment with a second week of inflows, post that decision and predicts July 2024 will see a launch date. “This represents a turnaround in investor sentiment in an asset that had seen a 10-week run of outflows prior, totalling USD200 million. This positive news for Ethereum has also had an impact on Solana, which saw a further USD5.8 million inflow last week.”

Interestingly, CoinShares writes that despite recent direct investments success in digital assets, blockchain equities have suffered, seeing USD7.2 million outflows last week and USD516 million this year.

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