A by-product of this adoption is increased access to the asset, with at least three companies having filed applications to launch the first bitcoin ETFs
Bitcoin continues to rise after a year of phenomenal growth. Registering new record highs almost weekly since the beginning of 2021, the cryptocurrency now appears to be entering an era of mainstream adoption.
While the bitcoin crowd has touted the digital currency’s value for long, there is a growing shift among financial institutions and top-tier companies, which have begun supporting bitcoin.
A by-product of this widespread adoption is increased access to the asset. Since the start of the year, at least three companies have filed applications to launch the first bitcoin ETFs.
Of those three, two have been successful so far: the Purpose Bitcoin ETF and the Evolve Bitcoin ETF. Both received the final nod in February and began trading on the Toronto Stock Exchange.
The first quarter also saw the launch of Ninepoint Partners’ Bitcoin Trust. Based in Canada, the trust began trading in both Canadian and US currencies on January 27. With an initial public offering (IPO) of C$230 million (US$180 million), Ninepoint’s crypto offering was fully invested within a day of listing, demonstrating retail investors’ desire to enter the complicated market.
There are some key differences between bitcoin ETFs and bitcoin trusts, with the most notable being how they track an asset. For trusts like Ninepoint, investors gain access to the underlying commodity by purchasing a share or unit of the trust. The trust then tracks the commodity.
ETFs are often referred to as baskets, as they hold a variety of securities. ETFs track an index and give investors an opportunity to broadly invest in a sector or space.
The Investing News Network spoke with John Wilson, Ninepoint’s co-CEO and managing partner, and Alex Tapscott, managing director of Ninepoint’s digital asset group, about the trust and its well-timed launch.
Wilson, a senior portfolio manager at Ninepoint, explained that part of the reasoning behind the launch of Ninepoint’s trust was the continued evolution of bitcoin, as well as growing interest in the asset across a variety of investment classes.
Over the last 12 months, you’ve seen just a whole series of announcements, from both investment institutions in terms of investing in bitcoin, and major financial intermediaries becoming part of the bitcoin value proposition, he said, citing Visa, MasterCard and Bank of New York Mellon’s recent forays into the bitcoin value chain, Wilson said.
So, all of that from our perspective meant that it was time to give people a way to access bitcoin in a way that was affordable, safe and easy. And that’s what we tried to do with Bitcoin Trust, he said.
There are a handful of offerings in the bitcoin trust space, but Ninepoint believes its low fee structure and experience sets it apart from the rest.
Ultimately, (investors) are using this vehicle to get safe, easy access to the underlying asset, in this case, bitcoin, said Wilson.
The fees on those (other trust) offerings are anywhere from 1.75 to 2 percent, and we felt that impairs their ability to properly track the underlying assets. So we priced (Ninepoint’s) Bitcoin Trust at 0.7 percent, which is obviously significantly below the next fee structure, over 100 beeps below, he said.
And I think our IPO showed that, we were over three times the size of the other bitcoin IPOs, he said.