Shares of ProShares Bitcoin Strategy ETF, ticker “BITO” rose 4.8% to close at $41.94. The first U.S. Bitcoin-linked exchange-traded fund tracks CME Bitcoin futures or contracts speculating on the future price of the major cryptocurrency, rather than the crypto itself.
That means investors in the exchange-traded fund should expect the price as well as the performance of the shares to differ somewhat from the price of Bitcoin itself. Such a scenario is not ideal for existing investors. Many investors take a long position regarding cryptocurrencies and had hoped for an ETF that would track physical Bitcoin that investors could buy and hold.
The price of the largest cryptocurrency when it comes to market capitalization jumped more than 4% to $64,206.51 on Tuesday. It was close to its all-time high from April 14. On that day, its price reached $64,899. On Tuesday, Bitcoin futures also rose about 4%.
The launch of the Bitcoin-linked ETF highlights the remarkable growth of the ETF industry. On its first day, BITO traded in excess of $700 million notional. That result puts its first day well ahead of retail ETF favorites like ARKX and BUZZ when compared to their respective launch days earlier in 2021.
The SPDR S&P 500 ETF debuted a long time ago in 1993. It traded about $40 million on its first day back in the 1990s. For comparison, by the end of the trading session BITO traded about $984 million in volume.
ProShares is the eighth-biggest ETF provider when it comes to assets. It is known for its funds that use leverage to track moves in certain indexes multiplied by a certain amount. The firm’s executives rang the opening bell at the New York Stock Exchange, where the ETF trades. ProShares has an expense ratio of 0.95%.
The crypto industry wanted to launch a Bitcoin-related ETF for many years. Several years ago, asset managers began applying to launch Bitcoin exchange-traded funds. But the Securities and Exchange Commission rejected their proposals. None of them were able to prove market resistance to manipulation according to the agency. The situation started to change in 2021. The Securities and Exchange Commission received many applications for futures-based ETFs shortly after Chairman Gary Gensler took the helm of the agency.
The launch of the first Bitcoin-linked ETF in the country will bolster the broader crypto market. One of the biggest advantages of Bitcoin is that it is a bearer asset with a highly liquid 24/7 spot market. In the future, investors will almost certainly come to desire a spot based, physically backed Bitcoin ETF.
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