BlackRock’s application for a Bitcoin ETF has pushed the price of the digital asset up 80 per cent for the year, above US$30,000. Plus, how the Fed’s interest rate pause may prolong pain for the U.S economy.
It seems New Zealand investors trust BlackRock’s Bitcoin option most, with a significant slice of trades flowing into its new fund.
BlackRock was one of 11 issuers that launched a Bitcoin exchange traded fund (ETF) on United States stock markets last week, following approval, but notendorsement, from the US regulator.
The first of their kind funds in the US aimed to track the price of Bitcoin, allowing investors to get exposure to the cryptocurrency without having to hold it directly - similar to how investors could buy shares in a company.
Local investors using the share trading app Hatch put almost $600,000 into the funds by Monday evening, data shared with the Herald showed.
More than half of that, about $370,000, flowed into BlackRock’s iShares Bitcoin Trust - an average value of $4150 per order.
The next most popular funds were the Ark 21Shares Bitcoin ETF, with a near $90,000 order flow, and Fidelity’s Wise Origin Bitcoin Fund with about $75,700.
BlackRock was winning on Sharesies too, as the most popular choice among the 500 investors buying into Bitcoin ETFs on the platform, according to a Sharesies spokeswoman.
Globally, almost US$10 billion was traded across the Bitcoin funds by Wednesday morning, according to Bloomberg.
Bitcoin is a digital currency touted by its believers as a rules-based system that is more efficient than fiat currencies like the United States dollar or New Zealand dollar. Photo / 123rf
Since the ETFs launched, the price of Bitcoin fell about 7 per cent to US$43,325 ($70,587) by Tuesday evening.
Bitcoin is a digital, decentralised currency, meaning it is not governed by a central bank, like the United States dollar or New Zealand dollar.
It was founded by Satoshi Nakamoto, an unknown person, in 2008.
Its believers, dubbed Bitcoiners, tout it as a rules-based system that is more efficient than the existing, fiat currency system, for reasons including that its supply was capped at 21 million tokens.
Many New Zealand investors already owned Bitcoin, and other cryptocurrencies, via platforms like Easy Crypto and Binance.
Easy Crypto co-founder Janine Grainger said the demand for ETFs could cause the price of Bitcoin to eventually increase.
“Once demand is established, this could lead to sustained buying pressure as institutions and retirement funds begin to incorporate crypto into their portfolios,” Grainger said.
She pointed to a potential catalyst event in April called the Bitcoin halving, which cut the supply earned from mining Bitcoin by half every four years.
“This year’s ‘Bitcoin halving’ has been widely tipped to be the cherry on top of this pricing optimism.”
Easy Crypto co-founder Janine Grainger highlighted this year's Bitcoin halving event as a potential price appreciation catalyst.
KiwiSavers were unlikely to have any exposure to Bitcoin as investment firms the Herald spoke to said they had not chosen to directly invest in the Bitcoin ETFs, nor were they aware of any indirect exposure through their external investment arrangements.
ANZ bank’s acting chief investment officer Mathew Young said it had no plans to invest in Bitcoin, however it always assessed its combination investments.
“The Security and Exchange Commission’s approval of 11 bitcoin ETFs is a milestone in Bitcoin’s adoption as a mainstream asset class.
“The approval of the ETFs will allow investors exposure to bitcoin without holding it directly. This is likely to increase the number of retail investors who seek exposure to bitcoin as an investment.”
A spokesman for Nikko Asset Management, which had an arrangement with Ark Invest, said it also had no current plans to invest client funds in Bitcoin.
Similarly, the state-owned Superannuation Fund had no exposure.
Madison Reidy is the host of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.
