TECHNOLOGY

Bitcoin ETF broke the record on Wall Street


The journey into the mainstream of cryptocurrencies hit a major milestone this week when the first exchange-traded fund associated with Bitcoin made its debut on the stock market. Simply put, this means that anyone with a brokerage account will soon be able to buy and sell a bitcoin-backed financial product in the stock market. It comes years after U.S. economic regulators stayed away from cryptocurrency, which is notoriously volatile. But now, it seems the government is ready to try something new.

The debut was a big hit. Executives at Maryland-based company Proshers behind the ETF rang the bell on the New York Stock Exchange on Tuesday morning, with the product topping প্রথম 1 billion in trading volume on its first day. This made it the top ETF debut in history. Since that day, the price of Bitcoin has reached an all-time high of $ 64,895, reaching a new record of $ 66,975. Experts don’t really think so.

“It was a blockbuster, smash, home run debut,” Eric Balchunas, a senior ETF analyst at Bloomberg, told me. “It brings a lot of legitimacy and the blink of an eye to crypto space.”

But before we get into that, maybe you have some more questions that are going around here. For example, what in the world is an “exchange-traded fund associated with Bitcoin”? What does “future oriented” mean? And after so many years of not paying attention to cryptocurrencies, do most people really need to pay attention to cryptocurrencies? Let’s go through these questions one by one.

An exchange-traded fund, or ETF, is a basket of securities tied to the value of an asset, such as a stock, bond, or commodity, that can be bought or sold on a stock exchange; Anyone can trade ETFs with a brokerage account. An ETF associated with Bitcoin, naturally, is associated with the value of Bitcoin and under the Investment Companies Act of 1940, all new ETFs must be registered with the Securities and Exchange Commission. This detail is important because the agency offers approval of a Bitcoin ETF that allows it to transact more products linked to the cryptocurrency. Although the SEC has not considered cryptocurrencies as securities in the past, recent developments suggest that its views on the subject are evolving.

But it seems it will take some time before the SEC makes a decision if it will allow Bitcoin to be traded in the stock market. The new ProShares fund, called Bitcoin Strategy ETF, is futures based. This means that the fund trades Bitcoin futures contracts on the highly regulated Chicago Mercantile Exchange. In other words, the ProShares Bitcoin Strategy ETF does not contain Bitcoin itself but bets on the future value of Bitcoin. In a CNBC appearance on Tuesday, SEC Chairman Gary Gensler noted that the new product will be overseen by the SEC’s sister agency Commodity Futures Trading Commission, which will provide Something Investor protection – but it’s “still a high-speculation asset class.”

Despite these complex details, this new bitcoin-based ETF is a big deal. The cryptocurrency community has been interested in such a financial product for years, but regulators are reluctant to approve one. Cameron and Tyler Winkleves created the first bitcoin-based ETF in 201bit, but the SEC rejected their first application four years later এবং and again in 2018 উল্লেখ citing crypto market volatility. Since then, the SEC has delayed the decision on various Bitcoin-based ETFs, but it is currently considering several new proposals, subject to a five-day review period after companies submit. If the SEC does nothing, as happened in the case of ProShares, the funds may start trading. In the next few weeks, the SEC review period for the cryptocurrency-based offerings of other companies, including Valkyrie Investments, Invesco, and VanEck, will also expire.

“It’s not like this particular ETF is going to bring in hundreds of billions of dollars or something,” Balchunas explained. But it’s an important moment because “it’s a bridge to this whole other world that’s probably not in crypto and maybe, now it’s being delivered in their desired format.”

In other words, more crypto-based ETFs are on the way. And if Gensler sees these new financial products being traded without incident, his SEC could open the door to many more, including cryptocurrencies like Bitcoin and Etherium. The existence of these ETFs does not only mean that investing in crypto is easy. This means that Bitcoin has more in common with gold than ever before.

This story was first published in the Record Newsletter. Register here So you don’t miss the next one!



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