It’s been an exciting time for cryptocurrency investing. In these past couple of months, we witnessed the launch of Canada’s first multi-cryptocurrency ETF on the Toronto Stock Exchange, and the debut of America’s first Bitcoin ETF on the New York Stock Exchange. This was followed by an all-time high for Bitcoin when it passed the $66,900 level on October 20th, surpassing its previous all-time high record of $64,899 in mid-April.

Bitcoin isn’t the only cryptocurrency on the block that’s been gaining momentum recently. Ether, the second-largest cryptocurrency by total market value, has joined the upward-trending bitcoin in setting new all-time highs. According to CoinMarketCap, Bitcoin hit an all-time high of $68,530.34 while Ethereum hit a record of $4,837.59 on Tuesday, November 9th.

Ether, currently valued at around $575 billion, is inching closer towards the bitcoin market cap of about $1.3 trillion. According to CoinDesk, ether was up 560% year-to-date while bitcoin only gained a “mere” 135%. Coinbase stated in its latest earnings report after the closing bell last Tuesday, November 9th, 22% of its third quarter trading volume was for ether, compared to 19% for bitcoin. Some analysts expect that a “flippening” would occur within this decade where the value of bitcoin would be topped by the value of ether.

To further understand why ether has gained so much in popularity, let’s take a closer look into this cryptocurrency and how it’s being used in the marketplace.

What is Ether?

Ethereum is often thought of as another version of Bitcoin, but there are important distinctions between the two. Ethereum is a global, decentralized blockchain that runs smart contracts and powers decentralized digital apps (DApps). As an example, decentralized finance applications (DeFi) are a blockchain based form of finance that allows users to trade and borrow assets without relying on financial intermediaries such as brokerages, exchanges or banks. Ethereum powers many cryptocurrencies in the decentralized finance sector. DeFi is potentially revolutionizing the entire traditional financial system. “The rise of the DeFi sector directly correlates with the price rise of Ethereum. Currently, 112.78 Billion is locked on DeFi projects, and 70% of all these projects are on the Ethereum network. A year ago to date, the total value locked (TVL) in DeFi was 25 Billion,” according to Konstantin Boyko-Romanovsky, founder and CEO of Allnodes Inc.

Ether is the cryptocurrency associated with the Ethereum blockchain and is required to utilize applications built on that network. Launched in 2015, ether has become the medium of payment for developers who build and run DAapps.

Why Consider Investing in Ether?

Ether has often been referred to as a digital oil because the Ethereum network powers digital ‘industrial’ applications. Ether can also be thought of in a sense as a Venture Capital (VC) investment. When you own the Ether token, you are exposed to the growth of the projects being built out on the Ethereum network.

Unlike Bitcoin, the total number of Ether tokens is not capped, rather is adjusts based on demand. In August 2021, the London upgrade (EIP 1559) added fee burning with every transaction. This was an exciting development for Ether because it changed the way the Ethereum blockchain hands out new tokens. With this upgrade, some of the charge that users pay to utilize the Ethereum blockchain is burned or deleted. This offsets the new Ether that is paid to miners as the block reward. The amount of Ether can therefore reach a stable point, or potentially decrease creating a deflationary coin.

Ether ETFs

In Canada, investors can also purchase physical (or spot) backed Ether ETFs. This means the ETF invests directly in physical Ether. The benefits of purchasing Ether in an ETF structure is similar to Bitcoin in that it is simple to trade, no digital wallet required, trades on regulated exchanges, can be held in a brokerage account and are TFSA & RRSP eligible.

Multi-Cryptocurrency ETF

Although cryptocurrencies are often positively correlated, there is a large dispersion of returns between them. In 2019, Bitcoin outperformed Ether by 95%, while Ether’s return was negative. In 2020, Ether outperformed Bitcoin by over 150%. For that reason, it is important that investors diversify across cryptocurrencies.

Investing in Cryptocurrency

Deciding which cryptocurrency to own and how much to allocate can be overwhelming for many investors. The Evolve Cryptocurrencies ETF (TSX: ETC) is Canada’s first multi-cryptocurrency ETF. ETC is designed to be a one ticket solution to cryptocurrency exposure. It is market cap weighted and rebalanced monthly. It currently only holds Bitcoin (TSX: EBIT) and Ether (TSX: ETHR) but as regulators approve other crypto ETFs they can be added as well.

If you’re looking for crypto specific ETF investment options, Bitcoin ETF (TSX: EBIT) and Ether ETF (TSX: ETHR) offer a great way to access the price of Bitcoin and Ether respectively. For more information visit the fund pages here:  https://evolveetfs.com/product/ebit/; https://evolveetfs.com/product/ethr/

For the latest information on cryptocurrency investing and industry updates on related investment products, sign up for our weekly newsletter here.

The contents of this blog are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed. 
These contents are not an offer or solicitation of an offer or a recommendation to buy or sell any securities or financial instrument, nor shall it be deemed to provide investment, tax or accounting advice. The information contained herein is intended for informational purposes only.
Commissions, management fees and expenses all may be associated with exchange traded funds (ETFs) and mutual funds (funds). Please read the prospectus before investing. ETFs and mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. There are risks involved with investing in ETFs and mutual funds. Please read the prospectus for a complete description of risks relevant to ETFs and mutual funds. Investors may incur customary brokerage commissions in buying or selling ETF and mutual fund units.
Certain statements contained in this blog may constitute forward-looking information within the meaning of Canadian securities laws. Forward-looking information may relate to a future outlook and anticipated distributions, events or results and may include statements regarding future financial performance. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “anticipate”, “believe”, “intend” or other similar expressions concerning matters that are not historical facts. Actual results may vary from such forward-looking information. Evolve Funds undertakes no obligation to update publicly or otherwise revise any forward-looking statement whether as a result of new information, future events or other such factors which affect this information, except as required by law.

Sign up for our newsletter

Disruptive and innovative trends are fundamentally transforming our world. Remain educated and be informed.