By
Tolu Ajiboye
April 23rd, 2024
The ProShares Bitcoin Futures ETF product tracks the speculations on the future price of the digital currency, which may make the product behave differently from the real BTC asset.
Tuesday, October 19th marked a historic day in the history of Exchange Traded Funds, and for the wider digital currency industry as ProShares Bitcoin Futures ETF ‘BITO’ went live on the New York Stock Exchange. As reported by CNBC, the ProShares Bitcoin ETF which tracks CME BTC futures, surged by as much as 4.8% to close at $41.94.
The new Bitcoin ETF product traded as much as $984 million against the SPDR S&P 500 ETF which recorded a total volume of $40 million on its first day of trading when it went live back in 1993. The ProShares Bitcoin ETF is notably one of the best performing ETF products floated this year, a development that materialized per investors’ long term longing for such a product.
“Trading volumes are exceptional,” said Will Hershey, CEO of Roundhill Investments, commenting on BITO’s day one trading activity. “BITO has traded in excess of $700 million notional. That puts its first day well ahead of retail ETF favorites like BUZZ and ARKX when compared to their respective launch days earlier this year.”
While the ProShares Bitcoin ETF is fully backed by law, and provides a certain amount of exposure to BTC, Chairman Gary Gensler still advises that investors exercise caution as the product may exhibit increased volatility.
“What you have here is a product that’s been overseen for four years by the U.S. federal regulator CFTC, and that’s being wrapped inside of something within our jurisdiction called the Investment Company Act of 1940, so we have some ability to bring it inside of investor protection,” Gensler said on CNBC’s “Squawk on the Street” on Tuesday. “It’s still a highly speculative asset class and listeners should understand that underneath this, it still has that same aspect of volatility and speculation.”
ProShares Bitcoin ETF: The Perfect Product for the Crypto Industry?
There has been a lot of struggle to get to this point where the SEC eventually approved a Bitcoin ETF product after years of trying. There have been many rejections of Bitcoin ETF applications as the market regulator remains unconvinced that the crypto industry is not prone to price manipulation.
The ProShares Bitcoin Futures ETF product tracks the speculations on the future price of the digital currency, a caveat that may certainly make the product behave way differently from the real BTC asset. While BITO is celebrated today, more market stakeholders are still anticipating the approval of an actual Bitcoin ETF, a product that is already underway in countries like Canada and Brazil.
“The launch of the first bitcoin-linked ETF in the US will bolster the broader crypto market and help an entirely new investor class experience the benefits of bitcoin as a legitimate asset,” said Anthony Bertolino, VP of growth at iTrustCapital. “However, a derivatives-based bitcoin ETF is not where we want to be long-term. One of the most attractive aspects of bitcoin is that it’s a bearer asset with a highly liquid 24/7 spot market. Investors will almost certainly come to desire a spot based, physically-backed Bitcoin ETF, and 10 years from now, I would even expect some of the bitcoin ETFs to allow physical redemption for those that want it.”