The first multi-crypto ETF which combines Bitcoin ad Ethereum in the North American market has been launched in Canada.
— Lark Davis (@TheCryptoLark) September 30, 2021
While the SEC continues to put a spanner in the works for the approval of a bitcoin ETF in the US, Canadian markets continue to innovate.
Success for Bitcoin ETFs in Canada
Following the success of BTC ETFs on the Toronto Stock Exchange, Canada is now taking the lead in a new innovation on the North American markets with a blended ETF based on both BTC and ETH.
This is Canada’s first multi-currency ETF, created by Evolve ETF, and traded under the ticker ETC also on the Toronto Stock Exchange (TSX).
This means that investors who want to take a position on both BTC and ETH prices at the same time can do so by purchasing shares in this ETF.
Trading of first multi-crypto ETF began yesterday
The weight of the two cryptocurrencies included in the ETF will be in proportion to their market capitalizations, i.e. currently about 67% BTC and 33% ETH. Evolve will rebalance these proportions monthly using its ETF on bitcoin (EBIT) and its ETF on Ether (ETHR).
Even though very often the price trends of BTC and ETH move in similar directions, sometimes they deviate a bit, especially over the medium term. For example, Evolve indicates that in 2020 ETH outperformed BTC by more than 150%, whereas in 2019 while BTC increased by 90% ETH closed in the negative.
The combination of BTC and ETH can therefore help provide some diversification.
Evolve president and CEO Raj Lala said:
“Bitcoin has established itself as a store of value and is often referred to as digital gold. Ether is often referred to as digital oil and has become an essential building block for digital finance including NFTs and other DeFi applications”.
The crypto sector continues to innovate at a rapid pace and to increasingly penetrate traditional markets, such as ETFs on North American exchanges.
In this scenario, the SEC‘s stance is a bit of a jarring one, as it seems unwilling to embrace these innovations because it considers the risks to be too high for retail investors.
Such risks do exist, but it is difficult to understand why they would be tolerable in Canada but not in the USA. To date, there have been no particular issues in Canada with retail investment in crypto ETFs, despite the fact that they have been on the market for months and are widely used.
It is increasingly safe to assume that the SEC will find it difficult to continue to oppose the approval of an ETF on bitcoin, or in particular BTC futures, which have been on the Chicago exchange for almost four years.