In anticipation of the first Bitcoin ETF, which will finally be coming to the US this week, Bitcoin hit $63,000.
ProShares will be launching its exchange-traded fund (ETF) linked to CME-based Bitcoin futures on the New York Stock Exchange (NYSE) under the ticker ‘BITO’ on Tuesday, the firm and the exchange have reported.
“2021 will be remembered for this milestone,” Michael Sapir, the CEO of ProShares, told DealBook.
Investors who want exposure to the leading cryptocurrency but don’t want to hold it directly and are hesitant to engage with unregulated crypto exchanges will now have “convenient access to Bitcoin in a wrapper that has market integrity,” he said.
In a statement on Monday, Sapir further said, “a multitude of investors have been eagerly awaiting the launch of a bitcoin-linked ETF,” and finally BITO will provide access to Bitcoin to this large segment of investors who have a brokerage account and are familiar and comfortable with buying stocks and ETFs but don’t want to go through the hassle for establishing another account with a crypto provider and be subject to security risks.
“This will be a floodgate of new capital and new people into the space,” said Ian Balina, CEO of the data and analytics firm Token Metrics.
Once it launches $BITO will have the highest (basically perfect) daily correlation to spot bitcoin of anything out there. Here’s a look at how $BTCFX (MF version of BITO) compares to other bitcoin-related stocks/funds. THIS WILL ATTRACT TRADERS. pic.twitter.com/b0NreAl8nY
— Eric Balchunas (@EricBalchunas) October 18, 2021
Approval for the ProShares ETF, which is based on Bitcoin futures trading on the CME, won’t be announced by the US Securities and Exchange Commission (SEC), but the firm’s formal prospectus has met with no opposition ahead of its effective deadline, which means it is good to go. NYSE is also readying its launch for tomorrow.
“This is an exciting step but not the last,” said Douglas Yones, the NYSE’s head of exchange-traded products. He foresees a range of crypto-linked ETFs getting approval, eventually.
Currently, nine other ETF applications for Bitcoin Futures are awaiting approval, while many more for physically-backed ETFs.
Future ETFs will come with its own costs, though, as it adds 5% to 10% of annualized roll yield on top of the underlying asset’s price. Not to mention, they are “also more confusing,” said Matt Hougan, chief investment officer at Bitwise Asset Management, which has also filed for a Bitcoin futures ETF with the SEC.
“They have challenges like position limit and official dilution, and they can’t get 100% exposure to the futures market.”
Interestingly, Grayscale also announced that it is filing to have its $38 billion Grayscale Bitcoin Trust converted into an ETF on Monday. GBTC is still trading at over a 15% discount.
“It is official,” confirmed Barry Silbert, founder, and CEO of Digital Currency Group, the parent company of the largest digital asset manager Grayscale Investments.
While calling Bitcoin Futures ETF launch a “historic and important moment” for Bitcoin and the entire crypto ecosystem, Jennifer Rosenthal, Communication Director at Grayscale, said,
“I’m happy to confirm that Grayscale *WILL* file for GBTC to be converted into an ETF as soon as there’s a clear, formal indication from the SEC.”
The official and verifiable evidence of SEC’s comfort with the underlying Bitcoin market could likely be in the form of a Bitcoin Futures ETF being deemed effective, and once that happens, “the NYSE Arca will file a document called the 19b-4 to convert GBTC into an ETF,” she added.