By
Chimamanda U. Martha
May 15th, 2024
Australia’s foray into Bitcoin ETFs signifies a growing global acceptance of cryptocurrencies as legitimate investment vehicles.
Australia plans to introduce Bitcoin exchange-traded funds (ETFs) inspired by the rising demand for US Bitcoin funds, which collected an impressive $53 billion during 2024 alone. Just like US investors can buy shares tracking Bitcoin‘s price, Australians will soon have similar opportunities, allowing individuals to participate in the Bitcoin market through regulated funds.
Leading firms such as VanEck Associates Corp. and BetaShares Holdings Pty aim to launch Bitcoin exchange-traded funds on the Australian Securities Exchange (ASX), which handles 80% of the nation’s stock trading. Experts believe the first Bitcoin ETFs will be approved for the ASX’s main market by late 2024.
The move follows the remarkable success of Bitcoin ETFs in the United States. Offerings from financial giants like BlackRock Inc and Fidelity Investments significantly contributed to the $53 billion total. Moreover, Hong Kong is poised to enter the arena, with funds directly investing in Bitcoin and Ether slated to commence trading on April 30.
The crypto market saw sufficient gains, with Bitcoin reaching its all-time high of $72,689 on March 13. This exciting rise invited ETF issuers to take advantage of the bullish trend, with many anticipating continued growth in digital assets space.
Bitcoin ETFs Taps into Australia’s SMSF Market
The Australian market has a distinct potential for Bitcoin ETFs. The nation’s robust pension sector is worth $2.3 trillion with a significant portion, around 25%, residing in self-managed superannuation funds (SMSFs), allowing individuals more authority over retirement savings. Industry experts like Jamie Hannah, VanEck Australia’s deputy investments head, state these funds could be major Bitcoin ETF market players.
Hannah highlights that the crypto industry holds vast potential across diverse sectors like SMSFs, brokers, advisors, and platforms. Together, these domains can establish a robust investor base, ensuring the upcoming Bitcoin ETFs thrive.
The current wave of Bitcoin ETF applications marks the second attempt in Australia. Two years ago, CBOE Australia, a smaller exchange with lower trading volume, tried to launch the first spot-Bitcoin ETFs. However, these initial offerings struggled to gain traction. Cosmos Asset Management, based in Sydney, launched a Bitcoin ETF in 2022 but eventually delisted it due to insufficient inflows.
Industry experts are placing their bets to list on the Australian Securities Exchange. Justin Arzadon, head of digital assets for BetaShares, stresses their goal of joining the renowned exchange, highlighting token custody as a key aspect scrutinized by the ASX.
Australians See Long-Term Potential
Bitcoin prices surged when US regulators approved exchange-traded funds tracking the cryptocurrency. But recently, Bitcoin experienced a significant downturn of 11% in the last month as hopes dimmed for easier monetary policy from central banks.
However, Australian investors see bright long-run prospects for digital money like Bitcoin. According to Lisa Wade, the Chief Executive of crypto investment firm DigitalX, Aussies could allocate up to 10% of their portfolios to cryptocurrencies. She believes cryptocurrencies could revolutionize finance.
Australia’s foray into Bitcoin ETFs signifies a growing global acceptance of cryptocurrencies as legitimate investment vehicles. With established players entering the market and a unique investor base in the form of self-managed super funds, Australia is poised to become a significant player in the burgeoning Bitcoin ETF landscape.