Bitcoin ETFs arrive in Australia just as the crypto market tanks

AUSTRALIA'S inaugural cryptocurrency exchange-traded funds (ETF) began trading on Thursday (May 12) amid a meltdown in digital tokens.

The ETFS 21Shares Bitcoin ETF, ETFS 21Shares Ethereum ETF and Cosmos Purpose Bitcoin Access ETF debuted on Cboe Global Markets's local exchange after a delayed rollout.

The ETFS portfolios will invest directly in virtual coins, while the Cosmos vehicle will invest in the Purpose Bitcoin ETF, a Toronto-listed fund with assets of about C$1.4billion (S$1.5 billion).

The funds are launching as the crypto sector reels from the unravelling of a high-profile stablecoin known as TerraUSD. A global wave of monetary tightening is also sapping liquidity and denting speculative investments.

Stablecoins are key elements of the plumbing in the crypto market, where traders park funds as they move in and out of other tokens. TerraUSD is supposed to have a stable value of US$1 but the peg has frayed, casting a pall over the market for digital tokens.

Bitcoin has plunged 38 per cent this year, while Ether has shed 44 per cent. Wild swings are common in crypto markets and the latest swoon may whet some people's appetite to bet on a recovery.

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On some projections, Australia's crypto market may hit US$1 billion by year-end and the country could also act as the Asia-Pacific's gateway to crypto ETFs, according to Bloomberg Intelligence analysts Rebecca Sin and James Seyffart.

Bitcoin rose about 2 per cent to US$29,000 as of 10.05 am in Sydney, while Ether climbed by a similar percentage to US$2,083. BLOOMBERG