Executives at the major ETF issuers will be paying close attention to the latest launch to hit the European ETF market. After months of rumours, Invesco finally madeits long-awaited entranceinto the cryptocurrency exchange-traded product (ETP) space with the launch of the Invesco Physical Bitcoin ETP (BTIC).
Invesco is the second issuer with over $25bn ETF assets under management (AUM) in Europe after WisdomTree to make the big jump into the crypto space.
The similarities with the gold exchange-traded commodity (ETC) space are clear to see. WisdomTree – through its acquisition of ETF Securities in 2018 – runs the world's first gold ETC which launched in 2003 while Invesco currently manages Europe’s largest ETC, the Invesco Physical Gold ETC (SGLD), which houses $14.2bn AUM.
Meanwhile, comparisonsbetween the underlying assets – bitcoin and gold – have been constant amid the former’s meteoric rise over the past few years.
As a research note from Robeco said: "Just like gold, bitcoin is scarce and durable. In addition, bitcoin exhibits high portability, is easily transactable and programmable. What it lacks relative to gold, of course, is a long history of being perceived as a store of value.
"As digital gold, bitcoin has monetary value. In our view, the discussion about bitcoin’s lack of intrinsic value is mostly irrelevant. As with diamonds, art, stamps, gold and the US dollar, bitcoin does not provide cash flows. Yet, all these asset classes have monetary value, and most of them are considered to be a store of value."
Bitcoin ETPs have already started to make their mark in the European ETF market. The first bitcoin ETP, the 21Shares Bitcoin ETP (ABTC), was only launched in February 2019, however, Europe’s largest crypto ETP, the BTCetc Exchange Traded Cryptocurrency (BTCE), has already soared past the $1bn AUM barrier and now totals $1.4bn.
As regulatory headwinds – such as the UK’s ban on selling crypto ETNs to retail investors – lessen, assets are only set to increase.
This growth is what has caught the eye of Invesco’s head of EMEA ETFs Gary Buxton who revealed to ETF Stream the firm has been working on a crypto ETP since 2018.
Like Robeco, Buxton sees many similarities with the precious metal: “In the last two to three years, we have been trying to structure a product that looked, from an institutional point of view, as close as possible to a traditional ETF like our gold structure, and that has been the driver of BTIC’s timeline.
“Bitcoin is very close to gold in the sense that investors view it as a diversifier from their traditional investments, an alternative asset with defined and limited supply.”
Attention now turns to the other major players in Europe. State Street Global Advisors (SSGA) has been keeping a close eye on the market over the past year, however, no word is yet to come from the traditional European asset managers such as Amundi, DWS and UBS Asset Management.
As a result, these players – and others – risk losing out to the likes of Invesco if the crypto market continues its rapid expansion as many believe it will.