This doesn’t bode well for Grayscale Bitcoin Trust (GBTC), which doesn’t have a redemption option. Already all three Bitcoin closed-end funds (CEF) in Canada went into discounts, but they do have redemption programs.
Last week, the first Bitcoin exchange-traded fund, Purpose Bitcoin ETF (BTCC), made its debut on the Toronto exchange, and it received an amazing response.
Launched on Feb. 18, it has already attracted more than $500 million of investor capital.
This week, TMX Group will be listing options around the Purpose Bitcoin ETF on the Montréal Exchange to cater to both the retail and institutional investors. Som Seif, founder, and CEO of Purpose Investments said,
“This is great news for investors and a powerful display of innovation in motion.”
“Not only does this provide investors with more ways to gain exposure to Bitcoin, but it also really cements the idea that Purpose Bitcoin ETF is the premier tracker of the cryptocurrency in North America.”
Now, another firm, Evolve Fund Group in Canada, has lowered the price on its Bitcoin ETF, EBIT, to 0.75% from 1% to compete. With this move, EBIT has now become cheaper than the 1% expense ratio of its competitor, the Purpose Bitcoin ETF.
BTCC started trading just a day before Evolve’s offering. However, compared to BTCC’s more than half a billion in assets, EBIT has only captured $28 million. Ben Slavin, head of ETFs for BNY Mellon Asset Servicing said,
“BTCC illustrates the importance of first-mover advantage in ETFs.”
“A one-day head start was all that was required to establish a clear lead for Bitcoin ETFs in Canada.”
On the first day of trading, more than $165 million worth of shares in the Purpose product changed hands, while for EBIT, it was just $14.6 million.
According to James Seyffart of Bloomberg, the launch of Bitcoin ETF in Canada doesn’t bode well for Grayscale Bitcoin Trust (GBTC) either because it doesn’t have a redemption option yet.
He noted how all three Bitcoin closed-end funds (CEF) in Canada went into discounts, BTCG down under -16%, immediately when BTCC began trading. But Candian CEFs have redemption programs, so that should limit discounts around month-end, he said.
As a matter of fact, on Thursday, the premium on GBTC also went negative to its lowest level. This huge demand for the Candian fund has also ramped up the interest in the US for issuers to gain first approval in launching a Bitcoin ETF. Nate Geraci, president of the ETF Store, an advisory firm said,
“Prospective Bitcoin ETF issuers in the U.S. must be salivating after witnessing the debut of BTCC, but they’re also likely feeling much more pressure now.”
“It’s reasonable to assume the winner of the U.S. Bitcoin ETF race stands to benefit significantly.”