https://www.afr.com/markets/currenc...emand-surges-on-trading-debut-20211020-p591g4 Vildana Hajric Oct 20, 2021 The first bitcoin-linked exchange-traded fund in the US, the ProShares Bitcoin Strategy ETF, saw strong investor demand during its trading debut, marking a watershed moment for the crypto industry. The fund -- trading under the ticker BITO -- rose as much as 5.4 per cent to $US42.15 before paring gains and turning negative at one point. Still, more than 20 million shares changed hands by around 2.54pm in New York, according to data compiled by Bloomberg. Because of the way the fund settles trades, net flows into or out of the product probably won’t be known until overnight on Wednesday. Bitcoin itself surged, rising above $US63,000. Tribune With turnover of around $US850 million an hour before its first trading day closed, BITO stands as the second-most heavily traded ETF for a first day of trading, only surpassed by a BlackRock carbon fund, which ranks higher due to pre-seed investments, according to Athanasios Psarofagis at Bloomberg Intelligence. Bloomberg also reported that options on BITO will begin trading on the NYSE Arca Options and NYSE American Options exchanges on Wednesday. Meanwhile, bitcoin made a run at its record high. It gained as much as 3.6 per cent to trade around $US63,600, slightly below its April all-time high of just under $US65,000. BITO was up about 1.6 per cent as of 2.55pm in New York. “From our conversations with market participants, I think it’s related to the growing belief as the trading day goes on that this is going to be considered a successful launch,” said Stephane Ouellette, chief executive and co-founder of FRNT Financial Inc., a crypto-focused capital-markets platform. “Given the amount of avenues retail investors already have to participate in BTC, clearly the US-based ETFs are nonetheless satisfying some kind of latent, even if niche, demand.” A bitcoin ETF has been long-awaited by both the crypto community and investors on Wall Street, many of whom have argued for years that approval by regulators would open up digital currencies to more mainstream investors. The ProShares fund is based on futures contracts and was filed under mutual fund rules that SEC chairman Gary Gensler has said provide “significant investor protections”. “We are really excited to bring BITO, the first bitcoin-linked ETF, to investors as an important opportunity for them conveniently to invest in bitcoin in their regular brokerage account,” Simeon Hyman, global investment strategist at ProShares, said on Bloomberg TV. “This is going to allow many people who have been waiting for an easy way to do this and a robust way to do this to now be involved and have it in their portfolios.” Retail investors rushed to buy the ETF on Tuesday. BITO was one of the most-bought assets on Fidelity’s platform with more than 8800 buy orders coming from customers as of 2.55pm New York time. “It’s an incredibly bullish week -- there’s been really positive sentiment around the ETF in particular,” said Sam Bankman-Fried, chief executive officer FTX, one of the largest crypto exchanges. It’s long been assumed that whoever received approval first could stand to reap the greatest benefits -- including industry recognition as well as potentially attracting huge amounts of cash. Some analysts are already bullish on BITO’s prospects -- the futures-based bitcoin ETF could attract more than $US50 billion in inflows in its first year given the hype around it, according to noted bitcoin bull Tom Lee, co-founder of Fundstrat Global Advisors. There are other applications for futures-based bitcoin ETFs in the queue. Analysts are anticipating launches from issuers such as Valkyrie, whose bitcoin strategy exchange-traded fund could trade under the ticker BTFD. Meanwhile, Grayscale Investments and the New York Stock Exchange filed to convert the world’s biggest bitcoin fund, ticker GBTC, into an ETF, appealing to regulators for approval just as its wildly popular vehicle is beset with competition. Market-watchers have a few measuring sticks with which to gauge BITO’s initial reception. The SPDR Gold Shares fund, ticker GLD, had the fastest-ever climb to $US1 billion in assets under management, reaching the landmark in just three days, according to Bloomberg Intelligence. More recently, the VanEck Social Sentiment fund, ticker BUZZ, saw more than $US400 million worth of shares traded on its debut earlier this year, one of the highest amounts ever for an ETF on its first day. “This is likely going to be the biggest launch of all time,” said James Seyffart at Bloomberg Intelligence. BITO is bound to pass VanEck’s BUZZ launch, he said. Seyffart added that the top launch and all launches above BUZZ’s had backing from pre-seeded institutions, which had been lined up to invest into the funds for hundreds of millions of dollars. “It’s likely not going to pass some of these funds that traded over a billion in the first day due to hundreds of millions from an institution or two that was lined up prior to launch. But it should pass BUZZ for what we tend to refer to as an ‘organic’ launch,” he said. Bloomberg News reported last week that the US Securities and Exchange Commission wasn’t going to stand in the way of the launch of a futures-backed bitcoin fund. Gensler has been viewed as being more open-minded toward crypto than his predecessor, Jay Clayton was. Observers cite Gensler’s previous interest in the crypto world -- he once taught a class at MIT’s Sloan School of Management called “Blockchain and Money”. And the chairman had earlier this year signalled that regulators may be more open to a bitcoin ETF if it were based around futures rather than the cryptocurrency itself. Bloomberg
Yeah right: pay the wide bid ask spread on BTC futures, then pay .95% each year to the fund for them to buy futures you could buy yourself, and finally cough up the contango roll after roll after roll. What's not to like? (For the issuer, that is)
Gosh ...there was no ETF during Dutch tulip era... Please note - I don’t know anything about many things...
The lack of options, yet. Seriously, this is for traders not for investors. If bitcoin pulls back, this is the vehicle to jump on...
The only thing it means is that the ETF will get fined a fuckton of money for exceeding the position limit. Wonder if that is noted in the ETF prospectus? I reckon' the position limits, both on monthly and aggregate, will simply be raised to accommodate this new ETF.
so the mention of rolling out to future months, i.e. Nov contracts, is no good? also mentioned other contracts, micro btc's?
There is an aggregate position limit that applies to all listed months combined. I forget the details on the BTC at the CME. For example, the ES is limited to current+2 forward contracts I believe. So you cannot maintain a total position exceeding X through all 3 months on any given day. If you do, you get fined. (The numbers here are exaggerated, but make the point.) So on ES, let's call it 5 million contracts aggregate, and 3 million on each month. If you somehow manage to accumulate 3 million on the front month, and 1 million on the next two months each, then you are OK. If you exceed 3 million on the front month, you are in violation of the monthly limit. If you exceed the 1 million of either of those forwards months while you have 3 million on the front month, you are in violation of the aggregate total across the three months. What I have seen from the CME's Business Conduct Committee statements is generally a fine, disgorgement of profits and sometimes a trading suspension. I do not believe any of that will apply to the ETF underwriter.