The first Bitcoin-linked ETF began trading on the New York Stock Exchange on Tuesday (10/19). The ProShares futures-based bitcoin ETF newly appeared on the NYSE under the ticker ‘BITO’. Importantly, this ETF consists of bitcoin futures contracts, therefore it is not linked directly to Bitcoin’s day-to-day price movements. Rather, the ETF holds contracts that speculate on the future price of Bitcoin.
The release of this ETF represents yet another significant and legitimizing move for Bitcoin. Since Tuesday marked the first-ever release of a Bitcoin-based ETF, ProShare’s experienced record-breaking trade volume. After closing the day at $41.94 with a total of 24.313 million shares changing hands, the ProShares Bitcoin Strategy ETF reached a total first-day volume of approximately $1 billion.
This unusually high volume indicates that investors want access to Bitcoin through their brokerage accounts. As we have seen over the past few months, people have rapidly been removing Bitcoin from exchanges, thus reducing supply. Now, the release of an ETF represents another factor to increase Bitcoin’s price.
At the moment, the strongest narrative surrounding Bitcoin is that of ‘storage-of-value’, and ‘digital gold’. Therefore, a futures-based ETF represents an opportunity for people who buy this narrative, to buy Bitcoin. Now, investors too apprehensive to buy on an exchange maintain the opportunity to gain semi-direct Bitcoin exposure through an ETF.
Since 2013, when the Winklevoss twins tried to file for a Bitcoin ETF application, there have been many attempts to get a Bitcoin ETF approved in the United States. Tuesday, 10/19, marks a day that investors have been waiting on for years. Senior ETF Analyst at Bloomberg Eric Balchunas said that ProShares experienced the biggest day one trading of any ETF in terms of ‘natural’ or ‘grassroots’ volume.
Clearly, the inflows into the Bitcoin futures ETF displays peak retail interest. Going forward, it seems Bitcoin will gain footing above its all-time high ($64,863) and continue to draw new money into the cryptocurrency markets.