On November fourth, investors flocked to the ASX to get a piece of the new up and coming BetaShares cryptocurrency-focused ETF (ASX: CRYP). CRYP headlined the investment community & within hours of its float, had broken the record for trading volumes on a new managed investment.
Australia’s First Crypto ETF launched on 4th November
Like any other ETF, CRYP invests in a basket of underlying shares. While its name may sound like one is investing in cryptocurrencies, that is not the case. CRYP’s portfolio hones in on shares of companies driving the cryptocurrency world. As its innovator promotes it, these shares are selected to provide “exposure to global companies at the forefront of the dynamic crypto economy”.
The adoption of cryptocurrency in Australia accelerated CRYP’s performance. For instance, Australian Securities and Investments Commission (ASIC) has approved of certain cryptocurrency funds after initially showing resistance. Demand for cryptocurrency will be expected to surge.
CRYP’s current top 5 holdings include Marathon Digital Holdings Inc, Galaxy Digital Holdings Ltd, Silvergate Capital Corp, Coinbase Global Inc, and Microstrategy Inc.
Volatile As Expected
Investors have certainly seen tremendous returns in the 5 days following CRYP’s launch.
- Marathon Digital was up 17.99% to US$75.3,
- Galaxy Digital shares were up 6.16% to C$42.22,
- Silvergate saw a nearly 1% gain to US$218.18,
- Coinbase increased 5% to US$353.92, and
- Microstrategy rose 7.84% to US$860 per share.
Nevertheless, the predominantly US-based companies (except for Canada’s Galaxy Digital) have had notable decreases in their valuations one week after its launch. After reaching an all-time high on the ninth, CRYP share prices nearly decreased to its inception price. This underperformance may have been signalled by Coinbase’s quarterly earnings report, prompting Coinbase share prices to fall by 8%.
Features of the ETF
CRYP’s parent, BetaShares, charges investors a yearly management fee of 0.67%p.a., with caveats that certain ‘additional charges’ may apply. This relates to the transactional costs for brokerages & custodians that will be paid out from the fund’s assets. This is higher than fees for other ETFs in Australia, which average 0.51% annually. While the difference between CRYP’s management fee and other ETFs in the market are small, minor adjustments in these charges can make a big difference for long term investors. Nevertheless, CRYP’s uniqueness may reflect this premium price.
Since the ETF tracks companies, CRYP has stated that investors may be able to benefit from regular cash returns through the form of dividends in the future. The extent of these distributions is aimed to be at least annually. After all, CRYP is still in its nativity – less than 1 month of age. Prices are expected to remain turbulent, reflecting the conditions of the crypto market.
