As per Cryptocurrency Exchange Latest News, the first-ever bitcoin linked exchange traded fund debuted recently. An ETF from ProShares that will keep track of the bitcoin futures market has started trading on the NYSE. The company has confirmed that it has been done under the ticker BITO.
Bitcoin Linked ETF
Many investors were eagerly waiting for the launch of a bitcoin linked ETF. Such an effort was underway for a long. BIBITO has opened up exposure to bitcoin to a huge segment of investors having a brokerage account. They are comfortable with stocks and ETFs and do not want to go through any inevitable roadblocks or learning curves while establishing a new account with a cryptocurrency provider. It also applies to those who are unregulated and are prone to security risks.
According to crypto projects analysis, soon after it was launched, the price of Bitcoin increased by more than 2 per cent, as reported by Coin Metrics. Several investors keep a watch to see if the Bitcoin jumps to a certain value, especially an all-time new high.
Cryptocurrency – The Road Ahead
Although the crypto industry is still very young, the Bitcoin ETF is expected to be a huge regulatory hit. After all, the crypto segment has been struggling for long to secure the position of crypto in the financial world, which is now highly regulated. In fact, four other ETF providers are looking to move forward soon.
It is expected that a second futures-based ETF will come soon. If that happens, it will be the biggest endorsement of crypto. Regulators from across the globe have been at odds with the crypto sector for long. As a result, the acceptance of crypto by retail investors got delayed. However, now It is expected that there will be a huge flow of capital and people in this segment.
For the last half a decade, asset managers have sought approvals to introduce spot bitcoins ETFs. It would give investors the much-needed boost for buying bitcoins instead of their derivatives. However, there was a time when these were all rejected by the Securities and Exchange Commission, which thought none of the cryptocurrencies were resistant to manipulation.
Future Of Cryptocurrency
From cryptocurrency projects reviews, it is now clear that investing in ETFs (futures-based) will not be the same as direct investment in bitcoin. A futures contract represents an agreement to either buy or sell an asset later and at a predetermined price. A futures-based ETF keeps track of the cash-settled futures contract. It is, in no way, concerned with the price of the asset.
It is expected that the all-inclusive cost of a futures-based ETF might be in the range of 5 – 10 percent once the annualized roll yield is taken into consideration. The annualized roll yield is the return captured by an investor on futures and price fluctuation of the asset. Also, futures ETFs are confusing at times. There are certain challenges like official dilution and position limit. As a result, it is impossible to get complete exposure to the futures market. According to experts, there are nearly four more bitcoin futures ETFs lined up for the next round along with a few more crypto projects launching soon. All of them will be moving forward. In addition, many believe that these ETFs will lead to a spot bitcoin ETF shortly. Although the period has been a short one, the market has developed since the initiation of ETF applications.