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Investors have rushed to buy and sell bitcoin-related securities on both sides of the Atlantic, a German exchange-traded product garnering trading volumes matching Europe’s most popular funds.
BTCetc Bitcoin Exchange Traded Crypto (BTCE) recorded an average daily trading of 57 million euros in the first 11 days of January, according to data from Deutsche Börse.
A similar trend has taken hold on Wall Street. Grayscale’s Bitcoin Trust, which like its German counterpart tracks the price of digital currency, recorded an average daily turnover of almost $ 1 billion in the first two weeks of this year, or more nine times the average in 2020, according to Bloomberg data. . Its assets under management climbed to $ 23 billion from $ 17 billion in late December and $ 2 billion in early 2020.
The sharp rise in securities trading shows that investors are increasingly looking to gain exposure or bet against cryptocurrencies in traditional markets rather than outright buying digital currencies.
The surge in BTCE trading this year – a strong recovery from the daily average of 15.5 million euros in December, the previous record – follows a tenfold increase in the price of bitcoin from March to a high of $ 42,000 earlier this month, Front made some gains.
Stephan Kraus, head of the ETF segment at Deutsche Börse, said the structure of the BTCE exchange-traded rating, which alleviated regulatory concerns and the counterparty risk involved in bitcoin trading, had “increased the attractiveness of investments. in cryptocurrency for institutional investors ”, who may negotiate need to set up a specialized digital infrastructure or use an“ unregulated crypto platform ”.
Deutsche Börse’s trading data shows a number of trades above € 30,000, which the group believes are unlikely to come from day traders or other retail investors.
Bradley Duke, co-founder and managing director of ETC Group, the issuer of BTCE, said he believes institutional investors are starting to buy cryptocurrency as a “safe haven”.
“Bitcoin has always had a bottom wave in retail, people interested in technology, and it has been seen as a ‘Wild West’ investment. It has really changed over the past six months, ”he said.
“The coronavirus played a role in this. It is starting to sound like an attractive alternative to currencies that could be devalued by stimulus packages. The packages are needed, but there are real concerns about the possibility of bringing inflationary forces into play. “
Still, the cryptocurrency market has remained dominated by retail traders and more speculative firms, including hedge funds, as opposed to traditional fund managers such as pension funds, who remain nervous about the intense swings. bitcoin prices.
The UK’s Financial Conduct Authority has banned the sale of cryptocurrency-related derivatives, including exchange-traded notes, to retail investors. He also renewed his warning this week that anyone investing in crypto assets “should be prepared to lose all of their money.”
Christine Lagarde, president of the European Central Bank, called on Wednesday to global regulation of cryptocurrencies to help fight their use in “grossly reprehensible money laundering activity”.
Also on Wednesday, the ETC Group listed similar exchange-traded notes denominated in dollars, pounds sterling and Swiss francs on SIX, the Swiss exchange, with Mr Duke indicating more products would be launched “in the coming weeks” on the base of other cryptocurrencies and a basket of cryptos.
Continental Europe has seen a wave of similar launches, with VanEck and 21Shares also offering bitcoin ETNs on Deutsche Börse. The Swiss stock exchange now lists 34 products traded in cryptocurrency from six issuers.