Cryptocurrency exchange-traded funds (ETFs) have outshone other ETFs in the past year, according to new data from Global X.
Leading the pack, the Global X 21Shares Bitcoin ETF delivered an impressive return of 118.1 per cent as of 30 September, driven by a falling interest rate environment, increased investor risk appetite, and strong inflows into bitcoin products.
Speaking to InvestorDaily, Billy Leung, investment strategist at Global X, highlighted that a multitude of industry developments has bolstered the success of cryptocurrency over the past year.
“The big one is obviously that, at the start of the year, the US SEC approved the bitcoin ETFs to allow US listing. So that was a major move, because A, we were waiting for a while and B, it has a fundamental impact,” Leung said.
He explained that increased investor flows into bitcoin ETFs can significantly boost the underlying price of the cryptocurrency, stating: “As we have more ETFs listed, that drove the bitcoin price up as well.”
Additionally, the bitcoin halving event earlier this year, while not a standout, contributed to a favourable environment for a strong bitcoin price.
Looking at the present, Leung noted that while October – often referred to as “Uptober” due to its historical association with bullish trends in crypto – is underway, the anticipated surge in bitcoin has not yet materialised.
This could be due to a number of things, including rising geopolitical tensions and the upcoming US election, especially since former president Donald Trump appears to be pivoting away from endorsing crypto.
Leung explained that while Trump was once a vocal supporter of cryptocurrency – having declared earlier this year his intention to make the US the “crypto capital of the planet” – his recent silence leads him to believe that a post-election bitcoin rally, should Trump win in November, might no longer be guaranteed.
“We all know that Trump is pro-digital assets and cryptocurrencies, but he’s been softer recently,” he told InvestorDaily.
“The race is getting tighter, so he’s dealing with much more important variables within the election. So I think this will be lower in terms of what he talks about and what he really enforces.”
This comes at a poor time for crypto given it is contending with other pressures, such as regulatory concerns in the US and global macroeconomic indicators.
In an analysis piece posted last week, eToro acknowledged the “turbulent market behaviour” bitcoin has faced in October, noting similarly that it is being driven by a combination of geopolitical events, macroeconomic pressures, and shifting sentiment among traders.
While citing those who expect bitcoin’s price to crash, some to even US$42,000 by the end of the year, eToro said there is “long-term optimism” for bitcoin, especially as institutional involvement grows and regulatory frameworks continue to evolve.
BTC Markets shares this optimism, likening the evolution of the crypto industry to the early days of the internet, where initial excitement was followed by “transformative growth and maturation”.
The firm noted a clear shift in cryptocurrency investment dynamics globally, with growth primarily driven by non-retail participants, including sole traders, trusts, and SMSFs, as opposed to small retail investors.
Looking to the future, BTC Markets said that crypto regulation will be the thing that shapes capital flow.
Particularly regarding the local landscape, the firm’s CEO, Caroline Bowler, said: “Private equity, venture capital firms and investment banks are eager to list innovative Australian companies via security token offerings, but they’re hindered by outdated local market infrastructure and a regulatory framework tailored for traditional markets.
“This restricts capital raising for Australian innovators and entrepreneurs – and limits local investors’ access to high-quality opportunities.”
But, she noted, the future of the local industry appears promising as stakeholders collaborate to advocate for regulatory change.
Bitcoin’s price stood just under US$64,000 on Monday afternoon AEST.
