Tracking the Nasdaq Bitcoin Tracker

Monday 05 October 2015

A Bitcoin tracker fund will be available on NASDAQ Nordic from October 5. So what to expect?

A new fund will launch in the coming days, to be traded on Nasdaq Nordic in Stockholm. It’s a bitcoin-based security, denominated in Euros. The Bitcoin Tracker EUR was announced by XBT Provider, the group also responsible for launching the Bitcoin Tracker One (BTO) back in May this year.

Alexander Marsh, Chief Executive Officer of XBT Provider, comments that BTO has been very popular - hence the move into a new fund. ‘Bitcoin Tracker One has during periods been among the top 3 most traded ETNs on Nasdaq Nordic since launch. With Bitcoin Tracker EUR we hope to further eliminate the boundaries that earlier prevented individuals and companies from being able to actively invest in what we believe will be the future of money.’

Christoffer de Geer, marketing manager at XBT, told BitScan, ‘Mainstream investors can soon invest in Bitcoin just like they would invest in any other stock. This has never been done before and we believe this will be very popular since we have seen massive interest in Bitcoin.’

So what’s it all about, and what’s the difference to BTO?

Bitcoin Tracker EUR is an exchange-traded note (ETN): a security that tracks the value of a commodity or security, making it easy for investors to buy in without jumping through the hoops of actually owning what it tracks. In this case, that means bitcoin itself. The problem for Average-Joe investor is that acquiring bitcoin can be a complicated and risky process. It involves moving money around unregulated exchanges and being technically capable enough to store your coins securely. An ETN makes investing in bitcoin as easy as buying any other stock.

Whilst BTO trades in Swedish Kroner (SEK), Bitcoin Tracker EUR is denominated in Euros. That might not sound like a big deal, but it is, as Christoffer explains. ‘Being denominated in Euro lowers fees for investors trading in Euro and eliminates boundaries for global investors to get easy and secure exposure to Bitcoin.’ (No offence to the Kroner, but the Euro is, after all, is a global currency.)


A trader surfs the new wave of liquidity that new investment vehicles are bringing to bitcoin

So what will the overall effect be?

Potentially a lot. 'XBT Provider do not have any market risk. The company always hold bitcoins equivalent to the value of ETNs issued.' That makes sense, because you don't want to be caught out by a big move if you don't actually hold any coins. So XBT Provider will be buying and selling bitcoin according to the amount invested by its customers. And, suggests Christoffer, whilst the SEK fund didn't make a huge difference, the liquidity possible through EUR is a whole different ball game.

'We believe that the bitcoin market is reaching a tipping point where real mainstream demand for bitcoin is about to take off. After seven years of ”proof of concept”, there are now a critical number of triggers and catalysts in place. As the estimated free-float of bitcoin and the amount of non-trading turnover on the bitcoins exchanges are really small compared to most markets, we only need a small pick-up in underlying demand or investments into bitcoin in order to get a huge impact on the price. We believe Bitcoin Tracker EUR will have a very positive impact on the overall Bitcoin ecosystem and see this as a great time to invest.'

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