After dropping below $30,000 in June, Bitcoin (BTC) has made nearly four months of gains, gaining more than 100%. On Friday, it managed to regain the $60K level after the end of the day with a jump of 7.56%. The rally that followed was caused by the hype around the Securities and Exchange Commission, which gave the green light to the ProShares Bitcoin Futures exchange-traded fund (ETF). Bitcoin has since successfully defended its current price level and managed to approach an all-time high of $64,899.
Tuesday’s listing of the ProShares Bitcoin Strategy ETF is expected to give Bitcoin and cryptocurrencies an additional boost to public legitimacy. However, the main fact about the new Bitcoin ETF is that it does not invest directly in Bitcoin, but instead allocates a portion of its assets to Bitcoin futures.
The ProShares Bitcoin Strategy ETF, listed as ‘BITO’ on the New York Stock Exchange, is the first of its kind, and some claim that it took 10 years to create this ETF because many Bitcoin ETFs were delayed or banned entirely by securities and exchanges. USA Commission. Commission, or SEC.
Some of the applications that have been identified that are still at risk are the Bitcoin ETFs from WisdomTree and VanEck. ProShares has been given the green light for a special difference: the ProShares Bitcoin ETF is a futures ETF also registered under mutual fund rules.
The Securities and Exchange Commission prefers this structure because it does not have jurisdiction over cryptocurrency markets that are not listed as exchanges in the United States.
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As stated in the ETF prospectus submitted to the SEC, the fund will allocate 25-30% of its assets to bitcoin futures. He also indicates that he plans to invest in regulated and listed ETFs for trading in Canada, as well as other pooled investment vehicles.
These positions are designed to handle capital inflows and outflows in response to unusual market conditions, increased margin requirements, or if it becomes impractical for a fund to access BTC futures. Most of the fund’s assets will go to money market instruments, which are then categorized into US Treasuries, repo agreements and reverse repo agreements.
Increased mass acceptance
As mentioned earlier, the Bitcoin ETF helps the entire market gain access, as did the Coinbase listing earlier this year. This is because investors who may not have direct access to cryptocurrencies, but have their own brokerage accounts, will have access to bitcoins.
Michael Sapir, CEO of ProShares, said in a statement that BITO provides access to investors who buy stocks and ETFs, but they don’t necessarily want to go through the hassle of buying bitcoins on an exchange or building a portfolio.
BITO can also be a precursor to other investment product offerings. For example, Grayscale Investments, the largest crypto asset manager, is already planning to convert the flagship GBTC into an ETF “as soon as there is clear formal guidance from the SEC,” said Jennifer Rosenthal, Grayscale’s director of communications. Grayscale CEO Michael Sonnenshein also said that ether-based ETFs are likely to follow suit after the successful listing of BITO.
Moreover, another Bitcoin futures ETF will appear this week. Securities and Exchange Commission (SEC) filings show it has accepted an application to register shares in the Valkyrie Bitcoin ETF strategy, which will be listed on Nasdaq. French investment firm Mellanion Capital will also launch its own Bitcoin-related ETF on Friday, following approval by the French financial regulator AMF. A fund called the Melanion BTC Equities Universe UCITS ETF invests in a diversified basket of stocks linked to daily bitcoin price movements and will be listed on Euronext Paris.
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Open interest is growing
Positive Bitcoin trading activity has also increased open interest in Bitcoin futures. Bybit crypto exchange data shows that on October 18, open interest in BTC futures reached $23.1 billion. That number peaked in April, when total open interest on several exchanges reached $27.38 billion.
To date, the leading exchange with the highest contractual value in dollars is Binance with 5.3 million