The first bitcoin futures ETF to debut on the NYSE on Tuesday, according to ProShares

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The first bitcoin-linked exchange-traded fund will officially debut on Tuesday.

ProShares’ highly anticipated ETF, which will track the bitcoin futures market, will begin trading on the NYSE on Tuesday under the ticker symbol “BITO,” the company confirmed.

“We believe a multitude of investors have been eagerly awaiting the launch of a bitcoin-linked ETF after years of efforts to launch one,” ProShares CEO Michael L. Sapir said in a statement on Monday. . “BITO will open up bitcoin exposure to a broad segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not wish to go through the hassle and learning curve of establishing another account with a cryptocurrency provider… or are concerned that these providers are unregulated and subject to security risks. ”

The price of bitcoin was around $ 60,000 on Monday morning after hitting $ 62,000 over the weekend, according to Coin Metrics, in anticipation of the ETF.

Bitcoin futures ETFs will also be a big regulatory feat for the still young crypto industry, which has long struggled to cement crypto’s place in the highly regulated financial world. Quatre hope to move forward with theirs this month. Invesco could arrive as early as this week.

“This will likely be the biggest SEC approval for crypto,” said Ian Balina, CEO of data and analytics firm Token Metrics, who also noted that regulators around the world disagreed with the crypto industry for years and “have hampered the acceptance of crypto” by retail investors. “It will be a lock for new capital and new people in space.”

Since 2017, at least 10 asset managers have applied for permission to launch cash bitcoin ETFs, which would give investors a way to buy bitcoin themselves, rather than related derivatives. They were all rejected by the Securities and Exchange Commission, then headed by Jay Clayton, who argued that none of them were able to show that the market was resistant to market manipulation. In a speech in August, SEC Chairman Gary Gensler said he would favor investment vehicles including futures, and a wave of bitcoin ETF futures applications followed.

Investing in a futures ETF would not be the same as investing directly in bitcoin. A futures contract is an agreement to buy or sell an asset at a future date at an agreed price. A futures-based ETF tracks cash-settled futures contracts, not the price of the asset itself.

“The overall cost of a futures based ETF could be in the range of 5-10% once you factor in the annualized rollover return,” said Matt Hougan, chief investment officer at Bitwise Asset Management. , which has its own application. for an online bitcoin futures ETF at the SEC.

The annualized return is the return that a term investor captures in addition to the change in the price of the underlying asset.

“Futures ETFs are also more confusing,” Hougan added. “They have challenges like position limit and official dilution, and they can’t get 100% exposure to the futures market.”

There are four bitcoin futures ETFs lined up for review in October, from ProShares, Valkyrie, Invesco and Van Eck. They will be allowed to go ahead and list 75 days after filing their documents if the SEC does not step in within that time.

Many are hoping that the allocation of these ETFs will pave the way for a spot bitcoin ETF in the not too distant future. Beyond Gensler’s preference for a futures market, the market has also grown much more in the short time since the first wave of ETF requests. Over the years, the SEC has challenged the crypto industry to prove that there is a large regulated market alongside the bitcoin spot market. According to Bitwise research submitted to the SEC last week, it is possible.

“The bitcoin market has matured to the point that the CME bitcoin futures market is actually the primary source of price discovery across the bitcoin world,” Hougan said. “Prices move in the CME market prior to moving to Coinbase, Kraken, FTX and therefore this satisfies the SEC hurdle for potential approval of a spot ETF.”

He added that the data also suggests that there is more capital committed to the CME bitcoin futures market.

“The crypto market was first run by retail exchanges like Coinbase, then dominated by things like BitMEX and Binance, and no one updated the record or did their homework, and homework. show that the market has changed, ”Hougan said.

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