FINANCE

The debut of the Bitcoin Exchange Traded Fund on Wall Street


The first U.S. Bitcoin Exchange Traded Fund was launched on Tuesday, helping to display a cryptocurrency-linked product at the Wall Street venue for nearly a decade.

ProShares Bitcoin Strategy was launched on the New York Stock Exchange hours after the ETF opened. Although similar ETFs are already trading in other jurisdictions, the listing in the United States – the world’s largest equity market – is a major test of whether mainstream investors are willing to keep stocks, bonds and other traditional liquid assets in their portfolios, as well as cryptocurrencies.

“This is an important milestone for the ETF, along with the first equity ETF [in the US] In 1993, the first fixed-income ETF in 2002 and the first gold ETF in 2004, ”said Michael Sapier, CEO of ProShares, which operates 65 65 billion in ETFs and is based in Bethesda, Maryland.

According to Bloomberg, New York’s ProShares fund was trading strong this morning, with more than 9m shares changing hands per hour. It has topped the list of the five most actively traded ETFs, surpassing the popular Invesco QQQ product that tracks many of America’s largest companies.

Bitcoin has reached near record highs earlier this year, partly due to expectations that Bitcoin ETFs will draw new money into the digital asset market. The most actively traded cryptocurrency rose above $ 62,000 on Tuesday, more than doubling from a low point during the summer sell-off.

ETF providers have been lobbying the Securities and Exchange Commission for eight years to allow such vehicles to trade on the national stock exchange. However, the top U.S. securities regulator was reluctant to give the green light due to the intense instability of the asset class and widespread concerns about the industry. Did not respond to a request for comment.

ProShares Bitcoin ETF contains futures contracts that track the value of Bitcoin instead of buying digital coins directly. SEC Chairman Gary Gensler said the commission would be more comfortable with such a structure because futures are traded in a regulated market. Spot trading in cryptocurrencies occurs in a wide variety of largely unregulated exchanges.

While U.S. investors can already buy Bitcoin through the $ 39bn Grayscale Bitcoin Trust, or directly through a private trust via crypto exchange, Sapir said ETFs will open the market to a wide range of investors, including 401 (k) pension fund users, personal retirement accounts and brokerage accounts.

The arrival of the Bitcoin ETF “opens up opportunities for many investors to invest in a larger pool of assets, including eggs,” said Ben Johnson, director of global ETF research at Morningstar.

However, “due to the mind-boggling historical volatility of the property, investors should be cautious, if not,” he added.

ProShares rival Invesco said late Monday that it would not follow the Future Bitcoin ETF in the “immediate near-term”. The group, which has partnered with Mike Novograts’ Galaxy Digital to launch a suite of crypto products, will move forward with plans for ETFs containing digital tokens instead of their tracked future.

On Tuesday, Grayscale said it had applied to the SEC to convert its flagship Bitcoin Trust into an ETF.

Although futures-backed ETFs are associated with more well-established products, investors may face losses পরিচিত known as “roll costs” যখনwhen the fund manager moves to a new contract when the previous contract expires.

According to ProShares data, a বিনিয়োগ 1,000 investment in Bitcoin futures in early 2019 will turn into, 10,879 by the end of September this year, compared to বিনিয়োগ 11,784 for a similar investment in spot Bitcoin.

Todd Rosenbluth, head of ETFs and mutual fund research at CTFRA Research, said that in addition to roll costs, “futures markets are rarely compatible with underlying security and can sometimes vary significantly, which is why gold ETFs and futures are more important when choosing between physicals.” .

Still, “investors have a subset that is very comfortable with ETFs that may be interested in these products outside the gate,” he added.

Additional report by Michael Mackenzie

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