The launch of Australia’s first crypto-focused ETFs this week was met with great fervor and excitement. Both ETFs managed to have record-breaking early trading numbers. In fact, the latest Beta Shares’ ASX-listed ‘CRYP’ ETF raked in over $42 million within the first day. It surpassed all previous launches on the exchange.
Even though a range of crypto-focused products is lined up to be launched, BetaShares CEO Alex Vynokur expressed caution towards the cryptocurrency industry.
While talking to Business Insider Australia, the exec noted that the success regarding crypto-focused ETFs hinted at “considerable” demand for digital asset investment products. However, he also mentioned, the asset class was a risky one to meddle with. Vynokur said,
“We would also like to stress the importance of diversification and as such, investments in digital assets should be considered as part of a broadly diversified portfolio.”
Ergo, this is why the first BetaShares ETF is focused on companies directly engaged with the crypto industry rather than the currencies themselves. However, the company expects to launch Australia’s first spot Bitcoin and Ethereum ETFs once regulatory greenlight is acquired.
Even if it was commendable, CRYP’s success was overshadowed by Cosmos Asset Management’s DIGA ETF, which became the best performing Australian ETF of all time, across all exchanges.
However, Cosmos chief executive Dan Annan also expressed similar concerns to Business Insider, urging investors to approach the asset class with caution now that it has heavily steeped into the mainstream. He said,
“You know, it definitely provides an outsize return asset class, but it does come with risks. So each investor should really analyze where this asset sits in their portfolio. It comes with high volatility, so from a portfolio construction perspective, it’s important they consider their tolerance of capital at risk.”
The CEO further added that for people who are willing to take on the risk, returns on digital assets investment have proven to be relatively high. Additionally, apart from price fluctuations, investors could also fall victim to investing in ETFs whose underlying assets are not entirely crypto-focused, Annan noted. He also said,
“And I think there are a few products out there at the moment that mask as digital miners, but when you lift the hood, they’re holding companies like Tesla and PayPal. It’s extremely important that [moving forward] investors lift the hood of the exposures they’re looking to own.”