Bull Sentiment Boosts Ether ETFs
Ethereum and blockchain ETFs dominated Canada’s top performing ETFs list last week, while ETFs tracking Lithium and copper joined the lineup with a strengthening performance.
Ether and blockchain ETFs were among last week’s top performing ETFs in Canada, driven by positive sentiment in anticipation of the “Merge.” The list also included lithium-tracking and copper ETFs due to a supply-demand imbalance and supply disruptions fears.
The Approaching “Merge” Propels Ethereum ETFs
The price of Ether, the native cryptocurrency to the Ethereum technology - and the world’s second-largest cryptocurrency - surged 8.95% over the course of last week, trading between USD$1,578 and $1,719 from September 5th-9th. Ether has had a strong run, going head-to-head with the flagship cryptocurrency Bitcoin (with its price hitting an all-year high against Bitcoin) as investors warm up for the “Merge.” Ether's transition from a Proof-of-Work (PoW) to a Proof-of-Stake (PoS) transaction validation mechanism will be the biggest event in the crypto space so far and will likely have a significant impact on the industry. The long-awaited “Merge” is expected to be implemented on September 15th and expectations are that it will bring greater efficiencies, with less energy consumption, benefiting investors, adopters, and the environment alike. ETFs that invest in Ethereum and blockchain have exhibited a strengthening in performance as the “Merge” draws closer, securing 7 slots on the Canadian top-performing ETFs list last week. The CI Galaxy Blockchain ETF (CBCX) ranked first having soared 13.37%, whereas the CI Galaxy Ethereum ETF (ETHX.B) came in third on the list with 9.43% of returns.
ETFs in play:
Lithium Shoots Higher Amid M&A Talks and Clean Energy Efforts
It isn’t a secret that demand for Lithium is expected to keep rising over the long term. Metal plays a crucial role in the production of batteries used for powering electric vehicles, among other large-scale applications. Aggressive projections by some industry analysts estimate the price of Lithium will surge 86% over the next couple of years. They argue that the current supply-demand imbalance could continue well into 2023, effectively leading to fatter bottom lines and cash flows for lithium miners.
Electric carmaker Tesla is considering erecting a lithium refinery in Texas, in an effort to secure a supply of the metal. As a key component in the electric vehicles business – where demand remains on an upward trajectory - Tesla’s CEO, Elon Musk, was quoted on a recent earnings call as saying that the lithium business is a license to print money. If the carmaker moves ahead with the plan, it will benefit from the first mover advantage, becoming the first in the sector to invest directly in lithium refining. Tesla said in a letter to the Texas Comptroller’s Office, as reported by Reuters, that it will employ the facility to process raw ore material into a usable state for battery production.
The price of lithium carbonate in China equaled the record-high recorded in March as surging demand coincided with lower supply. The price has soared almost 80% since the beginning of the year having risen to YUAN495,500 per ton as of September 9th. The only Canadian ETF exposed to lithium and lithium miners, Horizons Global Lithium Producers Index ETF (HLIT) went up 12.64% over the course of last week, to take second place on Canada’s top 20 ETFs list.
ETFs in play:
Copper Rises Over Disruption Concerns
Copper workers in BHP’s Escondida, the world’s largest mine, last Wednesday threatened to go on strike over safety concerns. This potential disruption to copper’s supply chain triggered shortage fears pushing its price higher. The news struck hard at a time when copper demand is rising: In an effort to improve its energy security and reduce energy dependency on Russia, Europe has significantly ramped up spending on grids and renewables, with China following suit, albeit for de-carbonization reasons. As a result, the Horizons Copper Producers Index ETF (COPP), Canada’s only ETF to provide exposure to copper miners and producers, posted 7.85% of gains last week.
ETFs in play:
Data for this article is as of September 9th, 2022.
