CoinGecko, one of the crypto world’s leading data aggregators, has published an analysis of the industry’s best ETP and ETF.
These types of financial products allow investors in traditional exchanges to gain exposure to the performance of Bitcoin and other cryptocurrencies without having to download a wallet and get into the logic of this market.
However, unlike SPOT ETFs, so acclaimed and desired by bitcoiners after several hedge funds’ applications to the SEC, the current ETFs and ETPs replicate the performance of some cryptocurrencies without there being a buying effect of the asset in question as the underlying.
Should the applications of BlackRock, VanEck, Wisdomtree, iShares, Bitwise, Franklin Templeton and company be approved, the investment world for crypto would be totally revolutionized, creating a likely wave of demand.
Let’s look at all the details together.
Summary
Main differences between an ETF and ETP
ETPs (Exchange Traded Products) are exchange-traded financial products that provide investors with exposure to certain sectors and investment themes, including crypto.
These represent a macrocategory of investment instruments that replicate the performance of stock indices or specific assets by simply following their performance in the relevant market.
Within ETPs we generally find 3 sub-instruments: exchange-traded products (ETFs), exchange-traded funds (ETNs), and exchange-traded commodities (ETCs).
ETFs allow investors to allocate money into a fund that seeks to replicate the same performance as the product in which they are investing, in a sense acting as an intermediary between the asset and the client.
ETNs diverge from funds and represent debt securities that track certain products.
The same is true of ETCs, where buyers are in fact going to provide credit to a company, with the difference from ETNs being that these are physically backed as they generally go to represent the market performance of a commodity.
ETNs, on the other hand, reflect all remaining investment sectors.
Hence, the main difference between ETFs and ETPs is that the former represents a subset of the latter.
Staying with the focus pointed on the crypto world, we can see that crypto ETFs represent the most widely used traditional tool for investing in this field.
However, it is important to understand that to date there are only “futures” ETFs where the performance of a cryptocurrency is replicated without the issuing fund having to buy the asset in question in spot.
The current most popular ETF and ETP in the crypto world according to CoinGecko
According to CoinGecko’s analysis, the best-known and most traded ETP in the crypto world is ETN Bitcoin Tracker One (COINXBT) from provider XBT with a value that totals $4.43 billion.
In contrast, the second largest investment product is the ETN Ethereum Tracker One (COINETH) with a value of $2.58 billion, also managed by provider XBT.
As for the context of Exchange Traded Funds (ETFs), which are much better known than the other subcategories of ETNs due to the latest disputes between investment fund managers and the Securities and Exchange Commission (SEC), we find one product in particular that is very well-known among investors.
We are talking about the Hashdex Nasdaq Crypto Index FI (HASH11), which with assets of $1.07 billion ranks third as the largest ETP in the crypto sector.
Overall, ETFs make up only 9 of the top 25 ETPs on cryptocurrencies, with a total value of $4.52 billion.
ETNs significantly exceed this threshold as the top 5 come in at about $8.09 billion in value.
ETCs, on the other hand, which invest individually in 8 distinct cryptocurrencies, are worth a total of $1.68 billion.
Bitcoin and Ethereum are obviously the most popular assets among the top 25 crypto-themed ETPs, with 12 BTC-based and 7 ETH-based products, respectively.
In 15th place within this ranking, though, we find an ETP that invests in the Binance currency (BNB), namely the 21Shares Binance BNB ETP (ABNB).
Hence, while investor attention remains predominantly on the two top crypto assets in the market, it is clear that slowly the world of traditional stock exchanges is becoming increasingly interested in so-called altcoins.
The major providers of these investment products on Bitcoin, Ethereum, and other crypto assets are XBT Provider, which offers 4 of the top 25 ETPs, Hashdex with 2 of the top 25 ETPs, and Purpose Investment which also governs 2 of the top 25 ETPs in this context.
21Shares also offers several ETP investment vehicles but manages a smaller dollar value than the 3 just mentioned.
On the geographic origin front, 6 of the top 25 ETPs come from Canada, followed by Sweden, the United States, and Switzerland with 4 investment products each.
The remaining 7 listed ETPs come from Jersey, Brazil. Germany and Liechtenstein.
The approval of a SPOT ETF could legitimize Bitcoin as an asset on traditional stock exchanges
As soon as the ETP conversation is mentioned, all crypto industry experts talk about the current tension regarding a possible approval of a Bitcoin SPOT ETF within the United States.
As mentioned earlier, all ETFs currently traded in the US that attempt to replicate the performance of BTC and other cryptocurrencies do not have as their underlying the very assets they offer and are framed as “futures” ETFs.
In fact, the companies issuing these products simply offer deals to buy or sell Bitcoin at a predetermined price at a predetermined future date, without owning the cryptocurrency itself.
In recent months, several US hedge funds and asset management funds such as BlackRock, ARK 21, iShares, Bitwise, VanEck, Wisdomtree, Invesco, Wise, Valkyrie, and Franklin Templeton have applied to the Securities and Exchange Commission (SEC) for an approval of a Bitcoin spot ETF in the country.
Should an approval of these particular investment products be confirmed, we could see a boom in institutional demand toward this kind of ETP.
The benefits for the crypto sector would be immediate since this would firstly allow Bitcoin to gain legitimacy on the mainstream stock exchanges as a respectable asset.
Second, this would prompt many individuals, still skeptical of this sector, to trust their preferred providers who would offer them guaranteed investment solutions, increasing the overall global demand for the currency.
Finally, the circulating supply of the king of the crypto market would go down because an investment fund, in order to run such a spot ETP and offer it to its clients, would have to own the cryptocurrency as its underlying.
Below is a table depicting the deadlines for an official response from the SEC, which will have to approve or reject the requests made by the various funds.
