Bitcoin ETF Launched: A Historical Milestone in Financial Markets!
Cryptocurrencies have spread far and wide since the 2021 bull run, and the global financial world cannot get enough of cryptocurrencies as a new financial investment class. On Tuesday 19th October 2021, history was made when the first ever Bitcoin futures exchange-traded fund launched in the US markets. The ProShares Bitcoin Strategy ETF launched on the New York Stock Exchange at the Tuesday bell, and although ETFs are traded in other jurisdictions, the real test will be to see if investors from the world’s largest equity market are willing to invest and hold cryptocurrencies alongside traditional mainstream assets such as bonds, stocks and commodities.
“This is an important milestone for ETFs, alongside the first equity ETF [in the US] in 1993, the first fixed-income ETF in 2002 and the first gold ETF in 2004,” said Michael Sapir, chief executive of ProShares, which manages $65bn in ETFs and is based in Bethesda, Maryland.
On the day of debut, the ProShares ETF (under the ticker BITO), saw over $1 Billion worth of trading, with 24 million shares changing hands making it one of the most successful ETF launches ever. BITO jumped an impressive 4.8% ending the day at $41.94, while on the same day Bitcoin also jumped more than 4% to $64,206, around 1% short of its April 2021 all-time high of $64,899. This is a milestone achievement in the global acceptance and demand for exposure to cryptocurrencies from traditional investors, and we can expect to see more institutional-grade investment products launched in the crypto asset class.
The first Bitcoin Futures Contracts anywhere close to an ETF was listed on Chicago Mercantile Exchange (CME) back in May, and the USD cash settled contract traded significantly higher on the day of the ProShares ETF listing on the New York Stock Exchange.
More Funds Applying for Bitcoin ETF
Valkyrie is another company that has been given the green light to launch a Bitcoin ETF, which is listed on the Nasdaq market. Comically, Valkyrie assigned the ticker BTFD, and any half-versed person in crypto will know what this stands for. Subsequently, earlier this week Valkyrie reassigned the ticker to be BTF, a little subtler and more leaning towards representing “Bitcoin futures”. BTF started trading on Friday 22nd October at the opening bell for the Nasdaq. Seeing the volume of the ProShares BITO, gives validating evidence that there is major demand for institutional grade Bitcoin Futures settled contracts.
Leading digital asset management fund Grayscale has revealed that it will file to convert its flagship investment product — the Grayscale Bitcoin fund ($GBTC) — into a Bitcoin spot ETF.
Exponential Volume Breaks Records as Highest Traded ETF on Launch!
In the first 2 days of trading the ProShares BITO ETF has nearly breached its limit on the number of futures contracts it is permitted to hold by the Chicago Mercantile Exchange. From the 2000 contract limit permitted on the front-month, BITO owns nearly 1900 contracts in the first two days for October, and already has 1400 contracts for November.
Contrary to the institutional buzz surrounding major stock exchange listings, the UK took a far more different approach to being so open and welcoming to the Bitcoin ETF, immediately creating a blockade for UK nationals. The Financial Conduct Authority blocked access to this type of fund for UK retail investors, contrary to many European nations such as Germany and Sweden. FCA has repeatedly voiced concerns about cryptocurrencies including their extreme volatility and the lack of a solid basis for their value.
However, many other countries on the same economical level as the UK have embraced this new digital asset class, while retail and institutional investors flock to the cryptocurrency markets, aided through potential instability and inflation in the traditional markets.
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