While US regulators still have not yet approved a single Bitcoin (the largest and most popular cryptocurrency) Exchange Traded Fund, the Canadian regulators have now begun to move past Bitcoin and are approving ETFs that focus on other cryptocurrencies such as Ethereum.
On April 20th, not one but three new cryptocurrencies’ ETFs began trading in Canada. The CI Galaxy Ethereum ETF (ETHX.U), the Purpose Ether ETF (ETHH.U), and the Ether ETF (ETHR.U) are all now available for purchase by anyone in Canada and any investor who has access to international investments.
Canada already has three Bitcoin ETFs, the CI Galaxy Bitcoin ETF (BTCX.U), the Purpose Bitcoin ETF (BTCC.U), and Evolve’s Bitcoin ETF (EBIT.U). When those ETFs were approved in Canada, it was big news, the same as now with the Ethereum ETFs trading hands.
Bitcoin is and was the first cryptocurrency that got this whole new world of money and technology started. So, it makes sense when it was the first crypto ETF. However, many industry experts believe Ethereum actually has more real-world applications and will improve people's lives to a great extent than Bitcoin will ever be able to achieve. The reason being is because Bitcoin was created to be a form of money using blockchain technology. However, Ethereum was created to help people decentralize certain tasks and allow users to perform tasks on a decentralized platform with more speed, accuracy, and less oversight but more security.
The main function thus far for Ethereum is what is called smart contracts. These are contracts that would be written and initiated on the Ethereum blockchain technology. Real estate contracts, buying, and selling of vehicles, business contracts, the list can go on and on for what Ethereum’s smart contracts can be used for in the future. But the point is, there is an actual tangible value to the Ethereum platform, compared to, let’s say, Bitcoin, which is only valued based on a monetary reason.
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This is the same argument many investors have over gold and silver. Gold has a high monetary value compared to silver. While they are both used as jewelry, silver is also used in electronic products due to its extremely high electrical conductivity properties.
Now I am not saying that Ethereum is a better investment over the long term than Bitcoin or that silver is better than gold. But what I like about Ethereum is that it has other uses than just as a new form of money. And apparently, a few other people like it as well. After just three days of trading, the CI Galaxy Ethereum ETF had picked up $75 million in investments, while the Purpose Ether ETF picked up $40 million, and the Ether ETF gained $8 million.
While these figures are nowhere close to what their Bitcoin counterparts have in terms of assets under management, it shows that demand, at least in the beginning, is there for the Ethereum ETF’s and its underlying assets, Ethereum itself.
If you are a US investor who does not have access to Canadian investments, you can still invest in Bitcoin and Ethereum in a roundabout way. You can buy Bitcoin through the Grayscale Bitcoin Trust (GBTC) and Ethereum through the Grayscale Ethereum Trust (ETHE). Many investors see these funds more like a “closed-end fund, rather than a full-scale Exchange Traded Fund.
Unfortunately, these are your best options at this time, unless you want to buy cryptocurrencies directly through a crypto exchange. But at this time, that would require you to have a separate account with the crypto exchange since none of the traditional stock market investment brokerage firms offer direct crypto investing.
Over the past few weeks, the price of Ethereum has increased at a faster rate than Bitcoin, which could be a side effect of these new funds and or a sign that more investors are attracted to Ethereum and its long-term prospects more so than the future of Bitcoin.
Matt Thalman
INO.com Contributor - ETFs
Follow me on Twitter @mthalman5513
Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.
