Bitcoin surges to an all-time high, trading above $66,000 on the launch of the Bitcoin futures ETF on Tuesday, October 19, 2021, on the NY Stock Exchange.
The first future-based Bitcoin ETF makes its market debut as BITO in the New York Stock Exchange.
It is the first Bitcoin focussed exchange-traded fund on the NYSE. The Securities and Exchange Commission granted approval for its trading on Tuesday. Almost $1 billion trading volume took place on the first day. Trading is done on the futures contract and not on the coins, making it easier for the regulatory market investors.
Volatile Bitcoin Movement
Bitcoin prices are trading once again with volatility. The launch of the future-based Bitcoin ETF on the NYSE buoyed the market prices of all cryptocurrencies like Bitcoin, Ethereum, and Litecoin. Bitcoin went up to a life-high level at $66,900. Ethereum surged to a life-high level at cryptocurrency prices of $4,236. Litecoin surged to $206 but is trading below its life-high, which is at $230.
Bitcoin prices shot up from cryptocurrency $10,000 in October 2020 to $66,000 in October 2021. Bitcoin prices saw high volatility in the months in-between. In January 2021, BTC prices were at $30,000, and in April 2021, it touched a life-high of $64,000. In July 2021, Bitcoin cryptocurrency prices slipped below $30,000.
On October 19, 2021, Bitcoin prices spiked higher and were trading at $66,900 on Wednesday, October 2021.
The Security and Exchange Commission (SEC) Chairman Gary Gensler supports the Bitcoin ETF’s futures contract. The ProShares fund is a futures contract filed under the mutual fund ruling.
ProShare Bitcoin Futures ETF BITO
ProShares Bitcoin Futures ETF closed at $41.94 on the first day of trading on the New York Stock exchange under the BITO ticker. Around $1 billion worth of shares traded hands on the NYSE. Small investors and traders dominated trading. High-frequency trading firms were showing interest in BITO trading. The buoyant mood among investors is driving the crypto market higher.
It is a milestone in the crypto industry in 2021, says CEO Michael Sapir of ProShares. More futures-based Bitcoin ETFs may join the trading space, say experts. Earlier, Valkyrie Bitcoin Strategy ETF received approval from the NASDAQ Inc. The crypto space is gaining attention from the traditional financial markets too.
Many investors wanted to enter the cryptocurrency exchange but did not trust the unregulated market. Now investors can gain exposure to the cryptocurrency as they will find it easier to understand the market say, experts.
Bitcoin Futures ETF
The future-based Bitcoin ETF launched successfully in the US boosted Bitcoin prices on Wednesday, October 20, 2021. Its listing on the New York Stock Exchange has been encouraging to investors in the crypto space.
It also got acclamation from Paul Tudor, the billionaire trader in the crypto space who states that crypto performs better as an inflation hedge over safe-haven gold. Crypto is a great hedge, says Jones. Cryptocurrencies are best to tackle rising inflation, says Tudor.
Bitcoin Futures ETF Rollover Costs Higher
Though futures-based Bitcoin ETF is available on the New York Stock Exchange, it has its disadvantages.
ETF trading has its own risks. Prices may move higher as they approach settlement day. Traders have to sell futures at a lower price and buy them at higher prices. It will wear down the investment amount, as the future roll-over costs will erode profits.
The prices of the ETF and the actual Bitcoin will not match as the future price of Bitcoin is higher than the Bitcoin spot prices. They trade at a premium.
The futures contracts are not easy to understand and investors should not expose themselves to new risks, as it involves a lot of money. It is best to invest, only what you can afford to lose, advice experts.
Retail traders who invest a smaller amount of money should not trade on the future-based Bitcoin ETF as they do not have enough exposure to it. But hedge funds may profit from this investment, say experts. New investors should stay from the Bitcoin ETF until they learn more about it. It is better to gain direct exposure to Bitcoin.
Confidence Among Investors
Regulatory risks will continue, say analysts. The Biden administration is taking steps to regulate the crypto markets by imposing an executive order to introduce new rules for cryptocurrencies. The Fed wants to crack down on money laundering and black money, rampant in the crypto industry.
The ETF listing will bring confidence to investors to trade in the crypto market. Though ETF trading will be comparatively higher than the amount spent to buy cryptocurrency itself, more investors may enter the market. Owning an ETF is relatively safer for investors and traders. They don’t have to worry about securing a crypto wallet and keeping their cryptos safe and secure.
Meanwhile, Ethereum rose almost 6%, as it surged with bullish momentum. It is trading above the $4,000 level.
Any crypto news that favors the crypto market gives a boost to cryptocurrency prices. The listing of the Bitcoin ETF on the New York Stock Exchange has encouraged the cryptocurrency prices to zoom higher.