Purpose Bitcoin ETF, the first North American exchange-traded fund for bitcoin, on Thursday began trading with a bang.
Volume for the fund on the Toronto Stock Exchange recently totaled 9.3 million shares. The fund opened at C$10.59 (US$8.35) and recently traded at C$10.36. The trading range for the day has been $10.07 to $11.
Investors may be familiar with the Grayscale Bitcoin Trust GBTC. But as the name suggests, that’s an exchange-traded trust, not an ETF. The new ETF says it’s backed by real bitcoin.
The big question surrounding bitcoin is whether it’s for real or just a fad. Given the infrastructure that’s growing around it, with heavyweight investors and institutions jumping on board, it could certainly be for real.
But there are signs of a speculative bubble too. Bitcoin has risen more than fivefold over the past year. That’s not the path of a stable asset. And it has periodically plunged during its 12 years of existence.
Bitcoin doesn’t meet the basic definition of a currency: It’s barely used for legitimate commerce. And the massive volatility means it will likely remain that way for some time.
Bitcoin represents a vehicle for speculation. Advocates see it as a hedge against inflation and declines in other financial markets. But that relationship isn’t clear yet.
Still, even if bitcoin is merely a speculative vehicle, as long as investors believe in it, it can remain powerful.
Star bond investor Jeff Gundlach on Thursday suggested on Twitter that bitcoin might be a better hedge against stimulus than gold right now.
Bitcoin recently traded at $51,947, down 0.22%.