Investors have taken a cautious approach on the first day of the Australian crypto ETFs, resulting in low trading volume.
On Thursday the 13th May 2022, three crypto exchange-traded funds (ETF) were opened to investors in Australia, but the start was very slow because Bitcoin is at its lowest point in 18 months.
In October 2021, Australian Securities and Investment Commission (ASIC) agreed to create a special category of “crypto assets” after a tug of war over the definition of cryptocurrencies in the law. This created a path for trading of crypto ETFs.
Three Pioneer ETFs Trade Well Below the Targeted USD 1 Billion Mark
Cosmos Asset Management exchange-traded fund (ETF), which focuses on Bitcoin via the Canadian Purpose Bitcoin ETF, reported USD 250,000 in trading volume for the first hour. The volume rose to USD 400,000 by 1 p.m. in Sydney.
The ETFS 21Shares Bitcoin ETF followed a similar trend. Then, ETFS 21Shares Ethereum ETF only managed USD 150,000 in the first hour of trading on the market.
According to a report from AFR, the volumes reported on the first day were far below the targeted USD 1 Billion capital inflow into the ETFs. On 12th May 2022, Bitcoin dropped to levels not seen since 2020. In a single night, the price plummeted by 16%.
According to Kanish Chung, trade was “relatively muted.” He added that the extreme volatility in the crypto industry made some of the previously interested investors to hold on, waiting for the storm to subside.
To try and incentivize volume and appeal to market makers, Cosmos waived fees over the first two months.