Australia’s first two crypto-focused ETFs have broken records in early trading as investor appetite for digital assets heats up

Australia’s first two crypto-focused ETFs have broken records in early trading as investor appetite for digital assets heats up
Australia's first two crypto-focused ETFs have broken records in early trading as investor appetite heats up. Photo: Getty Images
  • The ASX’s first crypto-focused ETF, ‘CRYP’ set a new trading volume record for the exchange 15 minutes into its debut.
  • After five days of trading, Cosmos Asset Management’s DIGA ETF has clocked the best five-day performance of any ETF across all exchanges, with a 25% return on a listed price of $5.
  • BetaShares, the fund behind CRYP, has now turned its attention to getting both a Bitcoin and Ethereum ETP over the line, after ASIC gave the currencies a tentative greenlight last week.
  • Visit Business Insider Australia’s homepage for more stories.

The first two crypto-focused ETFs to hit Australian exchanges have each broken records in early trading, after BetaShares’ ASX-listed index, which started trading under the ticker ‘CRYP’ today, broke the exchange’s volume record within the first 15 minutes. 

The new BetaShares ETF debuted on the Australian Stock Exchange (ASX) at 10.30am on Thursday for $11.23 per unit, and saw trading volume skyrocket to $8 million just 15 minutes later. 

According to Bloomberg data, the product’s trading volume skyrocketed to $24.5 million by midday, before shooting up again to $28 million by 1pm. By close of trading, investors had poured more than $42 million into the index.

CRYP’s trading volume set a new record for an ASX-listed ETF on Thursday, after Hyperion booked $8 million worth of trading on the first day its Global Growth Companies Fund started trading. 

BetaShares CEO Alex Vynokur told Business Insider Australia that the performance only offers itself as testament to the idea that appetite for exposure to digital assets is “considerable”. 

He said the fund has now turned its attention to rolling out a suite of crypto ETPs, after ASIC tentatively greenlit the products, in a bid to claim another Australian first. 

“Following the successful launch of CRYP, we are looking forward to building out a range of ETFs providing Australian investors a broad range of exposures to the digital assets ecosystem, including the expected launch of the 1BTC and 1ETH ETFs, which will provide access to the performance of the spot prices of Bitcoin and Ethereum,” Vynokur said. 

“We are excited to lead efforts to provide Australian investors with a regulated, cost effective, transparent and convenient access to the digital assets space,” he said. 

“However, we would also like to stress the importance of diversification and as such, investments in digital assets should be considered as part of a broadly diversified portfolio.”

The BetaShares ETF promises to capture the “full breadth” of the crypto ecosystem by offering investors exposure to “pure-play” crypto companies — ones whose balance sheets are deeply exposed to crypto assets — along with diversified companies with a crypto focus. 

The fund says 85% of the index is focused on companies whose revenue comes directly from servicing cryptocurrency markets, or have at least 75% of their assets in crypto holdings, like crypto trading platforms, miners, and the businesses that supply their equipment. 

The remaining 15% of the index will be made up of investments in diversified large-cap companies, the fund said, that have overlap with the crypto ecosystem through at least one line of business. 

Among them are Coinbase, the largest US-based cryptocurrency exchange (COIN), the Bitcoin mining company Riot Blockchain (RIOT), and business intelligence firm Microstrategy (MSTR). 

BetaShares wasn’t alone in breaking exchange records with the launch of a crypto-focused ETF. 

Five days after it was listed, Cosmos Asset Management’s DIGA ETF has become the best performing ETF in the Australian ETF market, across all exchanges, with a 25% return on a listed price of $5. 

The Cosmos ETF almost doubled the return of Australia’s previous leader, HGEN, which held a five-year return record of 12.6 % over a five-day period. 

Cosmos chief executive Dan Annan told Business Insider Australia said it’s “incredible”, but urged investors to continue to approach the asset class with caution, particularly as they become normalised and steeped heavily in the mainstream. 

“You know, it definitely provides an outsize return asset class, but it does come with risks,” Annan said. “So each investor should really analyse where this asset sits in their portfolio.”

“It comes with high volatility, so from a portfolio construction perspective, it’s important they consider their tolerance of capital at risk,” he said. 

But, he said, if investors are willing to take the risk, the return has proven relatively high. 

“One of the analyses we did was look at a traditional 60-40 portfolio — where 40% is fixed interest, and 60% is global equities — and we looked at if you allocated 1% of DIGA [in that setting], or 3%, or 5%, what is the outcome?”

“Of that stat, it was actually pretty interesting,” he said. “If you allocated 5% [of DIGA] in a 60-40 portfolio, for the time period that the index has been around, it delivered 50% returns.”

Annan said the DIGA fund promises to include only the “purest” equities ETFs linked to crypto markets, though, without exposure to exchanges — like CRYP’s Coinbase offering — or other crypto go-betweens. 

As more products like it enter the market, though, he urged investors to look “under the hood” and be sure that an ETF’s entire index’s underlying holds are, in fact, crypto-focused.

“The only analogy I can think of is, if you were to buy [into] a gold miner, you wouldn’t want to lift the hood and find a jeweller like Tiffany’s, right?,” Annan said.

“And I think there’s a few products out there at the moment that mask as digital miners, but when you lift the hood, they’re holding companies like Tesla and PayPal,” he said.

“It’s extremely important that [moving forward] investors lift the hood of the exposures they’re looking to own.”