Gate.io Research Institute: A Study on the Market Operation and Development of Cryptocurrency ETFs

2021-06-03, 02:31

The cryptocurrency market continues to reach new highs in terms of market capitalization, and the demand for diversification of investment tools is growing. The listing of Bitcoin ETF and Ethereum ETF on the Toronto exchange in the first quarter of this year drew the attention of the insiders and potential investors, setting off an investment boom in cryptocurrency ETFs. This research report examines the tracking performance of cryptocurrency ETFs in terms of tracking deviation, examines their liquidity in terms of trading volume and liquidity indicators, and then judges their development stage and maturity by comparing them with Nasdaq100 ETF and Gold ETF in traditional finance, and finally predicts that the competition of crypto market ETFs in the future should focus on the optimization of tracking performance.

Highlights:

◆Among BTC ETFs, Purpose is the first to issue, 3iQ Coinshares has the largest market capitalization, and CI Galaxy has the best tracking performance; liquidity is severely divided, with Purpose having the strongest liquidity.

◆Among ETH ETFs, 3iQ Coinshares has the largest market capitalization and Purpose has the best tracking performance. There is some liquidity differentiation and CI Galaxy has the strongest liquidity.

In terms of tracking performance, BTC ETFs are stronger than ETH ETFs, with higher consensus on underlying assets, longer operation time of ETF products, and relatively mature product form.

◆In terms of liquidity, the 24H trading volume of BTC ETFs is generally larger than that of ETH ETFs. Liquidity differentiation is more serious, and both have high-quality products with liquidity LR value of 10 million.

◆Traditional financial market ETFs are better than cryptocurrency ETFs in terms of tracking performance and liquidity, and the gap is obvious.

The tracking performance of BTC ETFs narrowed the gap; several cryptocurrency ETFs already have the liquidity level of traditional market ETFs with 10 million LR value.

In terms of product maturity, gold ETF > Nasdaq ETF > BTC ETF > ETH ETF. It is predicted that the future cryptocurrency ETFs will present a situation where BTC is the main category and other cryptocurrencies are supplementary.
It is predicted that crypto coin ETFs in the future will focus on the optimization of tracking deviation while enhancing liquidity, and products with better tracking performance which will be more favored by the market.

The English version will be soon updated, please stay tuned!

Author: Gate.io 研究院Esteban Ma, Zian Zeng, Jill Chow
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