Since becoming the first spot bitcoin exchange traded fund in Canada in February 2021, the Purpose Bitcoin ETF has surpassed CAD$1.7 billion assets under management and, according to Glassnode, holds over 36,000 BTC.
One Bitcoin analyst noted the dramatic increase in holdings over the past week in particular:
The Canadian Purpose #Bitcoin ETF has just hit another ATH yesterday of 36.27k $BTC. Last week the ETF ended with an AUM of 34.07k bitcoin. That’s more than 2k bitcoin added this week so far …
Jan Wüstenfeld, Bitcoin analyst for @QE4Everyone
ETFs Not Welcomed by All
A spot-based Bitcoin ETF – that is, one exposed to the price of bitcoin, as opposed to something like a futures contract – is a somewhat divisive topic within the Bitcoin community.
Some regard ETFs as an easily-understood and accessible vehicle for everyday investors to gain exposure to bitcoin. In doing so, it broadens the tent so to speak, and opens up the sector to a whole new range of retail and institutional participants.
An opposing view highlights the risks of manipulation within paper markets linked to physical assets such as gold and silver. Within the context of Bitcoin, this could undermine the protocol’s most fundamental principle, namely a fixed and verifiable supply.
Unfortunately, one needn’t go back too far in history to find evidence of manipulation in financial markets. In 2020, investment bank giant JPMorgan paid US$920 million in fines and restitution for its role in manipulating the paper silver market.
Canada Leads the ETF Way
Whatever one’s view of spot-based Bitcoin ETFs, Canada has undoubtedly been at the forefront of bringing crypto ETFs to market. Not only was it the first country in the world to approve a Bitcoin ETF, it has since successfully launched another four.
By comparison, across the border in the US regulatory authorities are yet to approve a spot-based Bitcoin ETF, citing “manipulation concerns”. As reported by Crypto News Australia, as of November last year there were 34 ETF applications pending approval. Many have since been refused and, at the time of writing, more than a dozen applications remain outstanding.
Tellingly, the Securities and Exchange Commission (SEC) did approve a futures-based Bitcoin ETF in October. This was met with mixed reactions, with the consensus view emerging that it provided little benefit to retail investors relative to the intermediaries involved:
This vehicle means that the arbitrager takes their slice, the ETF provider takes their slice, the lawyer who set up the fund takes their slice, the administrator, the auditor … I mean, everybody is taking a slice out of your pie.
Real Vision founder/CEO Raoul Pal, on the futures-based Bitcoin ETF
While it remains unclear what the holdup is at the SEC, as one on-chain analyst noted, if the Purpose Bitcoin can double in 10 months, imagine what would happen if a spot-based ETF launched in the US:
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