Low Trading Volume for Bitcoin and Ethereum Investment Instruments in the UK

• The United Kingdom has seen notably low trading volumes in Bitcoin and Ethereum investment products.
• Bitcoin and Ethereum-backed ETNs debuted on the London Stock Exchange with FCA approval on May 28.
• ETNs are debt instruments that reflect the positive or negative performance of an underlying asset.

Discover the challenges facing Bitcoin and Ethereum investment vehicles in the UK, dive into the lackluster trading volumes, and explore future outlooks for investors.

Debut of Bitcoin and Ethereum ETNs in London

The debut of Bitcoin and Ethereum-supported exchange-traded notes (ETNs) on the London Stock Exchange (LSE) marked a significant milestone for crypto investments in the UK. With the Financial Conduct Authority (FCA) granting approval, these products, which include ETNs from firms like 21Shares and WisdomTree, became accessible to professional investors.

Low Trading Volumes Raise Concerns

Despite the hype, trading volumes for these ETNs remained dismally low. By June 6, the total trading volume since their initial trade day amounted to a mere $504,880. A deeper look reveals that 59% of this volume originated from WisdomTree’s ETNs, while 41% was from 21Shares. Surprisingly, investment products managed by Invesco recorded no trading activity at all.

Implications for Professional Investors

Unlike U.S. spot exchange-traded funds (ETFs), these ETNs are currently available only to professional investors, limiting their market scope. According to 21Shares, making these investment products available to the general investor population could be “ground-breaking.”

Current Market Sentiment

Analysts from 21Shares pointed out that professional investors often opt for over-the-counter (OTC) transactions instead of trading on public exchanges like the LSE. Alex Pollak, the country head for 21Shares in the UK, remarked that while the FCA’s approval is a significant step in the right direction, the low trading volumes were anticipated.

Future Outlook and Market Expansion

Pollak emphasized the importance of the FCA’s approval, noting that it represents a crucial move towards broader acceptance and future market expansion. “The FCA’s approval for professional investors in the UK is a critical milestone, and we eagerly anticipate the potential opening of this market to retail investors,” he added.

Conclusion

The introduction of Bitcoin and Ethereum ETNs on the London Stock Exchange is a pivotal development for the UK’s crypto investment landscape. However, the disappointingly low trading volumes highlight the challenges and limitations currently faced by these products. As regulatory frameworks evolve and market conditions change, there could be significant opportunities for both professional and retail investors in the future.