In brief

  • BTCE average daily volumes on the Deutsche Börse hit new highs this year.
  • They neared volumes seen on ETFs.
  • The previous record was seen in December 2020.

Trading volumes for BTCE, the world’s first centrally cleared Bitcoin exchange-traded product (ETP), rose to a record €57 million ($69.1 million) in the first 11 days of January 2021, as reported by the Financial Times.

An ETP is a type of security that tracks an underlying asset or financial instrument. They are similar to ETFs, which contain a basket of investments and typically track an underlying index. A Bitcoin ETP allows a firm to get exposure to Bitcoin without holding the asset itself.

BTCE's trading volumes can be compared to levels usually only seen by the most popular European ETFs. The January record was just €1 million ($1.21 million) short of INRG, the most traded ETP on the German exchange, with the corresponding numbers for other 1,800 ETPs listed on Deutsche Börse being way behind those of BTCE.

With $433 million of assets and a total expense ratio of two percent, BTCE is physically backed by Bitcoin stored with California-based BitGo Trust. Each unit of BTCE gives the holder a claim on a predefined amount of the cryptocurrency.

According to Stephan Kraus, head of Deutsche Börse’s ETF segment, the structure of the BTCE exchange traded note has made cryptocurrency more attractive for institutional investors. With no counterparty risk involved and eased regulatory concerns, there’s no need for them to set up digital wallet infrastructure or use an “unregulated crypto platform.”

“Bitcoin has always had a retail groundswell, people who have an interest in technology, and it was seen as a wild west investment. That has really changed in the last six months,” Bradley Duke, co-founder and chief executive of the London-based ETC Group, the issuer of BTCE, told the FT, adding that institutional investors are starting to see the cryptocurrency as a “safe haven.”

“It’s starting to look like an attractive alternative to currencies that may be devalued by the stimulus packages [offered by governments during the Covid-19 pandemic]. The packages are needed but there are real concerns they may set inflationary forces in play,” he said.

On January 14, the ETC Group announced it listed similar ETNs denominated in USD, GBP and CHF on the Swiss Stock Exchange SIX. According to Bradley Duke, the product offering would be expanded in the next few weeks to include other digital assets and a basket of cryptos.