First bitcoin futures ETF to make its debut on the NYSE Tuesday, ProShares says
Officially, the first bitcoin-linked exchange traded fund will debut on Tuesday.
ProShares’ eagerly awaited ETF will trade on the NYSE Tuesday under the ticker BITO’, the company confirmed.
ProShares CEO Michael L. Sapir stated Monday that he believes that a large number of investors are eagerly awaiting the launch a bitcoin-linked ETF. This statement was made after years of effort to do so.
‘BITO will allow investors to buy stocks and ETFs from their brokerage accounts. However, they don’t want to have to learn how to set up a new account with a cryptocurrency provider or create a bitcoin wallet. They are also concerned about the potential security risks.
After rallying to $62,000 over the weekend and falling as low as $60,000 on Tuesday morning, the bitcoin price was at around $60,000 by Tuesday morning, Coin Metrics in anticipation of ETF.
The regulation of Bitcoin futures ETFs is a significant regulatory achievement for the still young cryptocurrency industry. This sector has long struggled with crypto’s place within the highly regulated financial market. Four other companies are also hoping to launch theirs in the coming months. Invesco could have theirs as early as next week.
“This will probably be the largest endorsement by the SEC for cryptocurrency,” said Ian Balina Bio CEO of data and analytics company Token Metrics. He also pointed out that global regulators have been at odds for years with the crypto industry and have ‘impeded crypto” acceptance by retail investors. “This will open up new capital and allow for new people to enter the space,” he said.
At least 10 asset managers applied for approval to create spot bitcoin ETFs. This would allow investors to purchase bitcoin directly, and not derivatives. All of them were rejected by the Securities and Exchange Commission (then headed by Jay Clayton), which stated that none of them could show that the market is susceptible to manipulation.
In August, Gary Gensler, chair of the Securities and Exchange Commission, stated that he would prefer investment vehicles that included futures. This was followed by a rush to apply for bitcoin futures ETFs.
It is not the same as investing in bitcoin directly. A futures contract allows you to purchase or sell an asset at a later date at a agreed-upon price. Futures-based ETFs track cash-settled futures contract prices, but not the actual asset price.
Matt Hougan is chief investment officer at Bitwise Asset Management. He stated that the all-in cost for a futures-based ETF could range from 5% to 10% once you consider the annualized roll yield.
An annualized roll yield is the amount of return that a futures investor gets on top of any price changes.
Hougan said that futures-based ETFs can be more confusing. They face challenges such as official dilution and position limit, and can’t have 100% exposure to futures markets.
Four bitcoin futures ETFs are up for review by Van Eck, Valkyrie Valkyrie, Invesco, and Invesco in October. If the SEC does not intervene within this time, they can move forward and list their ETFs 75 days after filing their paperwork.
Many believe that the future will see a spot Bitcoin ETF being allowed by these ETFs. Gensler prefers one that is based on futures. The market has also developed significantly in the relatively short time since the initial wave of ETF applications. Over the years, the SEC has challenged crypto industry to show that there is a large regulated spot market as well as spot bitcoin trading. According to Bitwise research, it does.
Hougan stated that the bitcoin market had matured to the point that the CME Bitcoin futures markets are the most important source of price discovery in all of bitcoin. ‘Prices move in the CME market before they move in Coinbase, Kraken, FTX… so it meets the SEC hurdle to approval of a spot-based ETF.
He also stated that data suggests that there is more capital available for the CME Bitcoin futures markets.
“The first crypto market leader was Coinbase, followed by BitMEX and Binance. No one has updated the record nor done the homework. The market has changed.
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