Bitcoin closes to all-time high on US futures ETFs
Bitcoin reached a six month high and was close to its all-time high on Tuesday. Traders bet that the debut of the first U.S. exchange traded fund with bitcoin futures could bring in investment flows into cryptocurrency.
Intercontinental Exchange Inc owns the ProShares Bitcoin Strategy ETF, which was listed on Tuesday under ticker BITO.
This was done following a period of 75 days in which the U.S. Securities and Exchange Commission had the right to object to the listing.
The new ProShares ETF was launched at $40.88, and closed at $41.64. ETFs are securities that track a particular asset. They can be purchased or sold on stock exchanges. Analysts believe the ETF will make it easier for investors to access cryptocurrencies.
Martha Reyes, Head of Research at cryptocurrency exchange Bequant, stated that it can attract flows of investors who prefer the simplicity of an ETF to the perceived risk of an Exchange.
Bitcoin, the largest cryptocurrency in the world, reached $63,337.54 upon its listing. This is its highest level since mid-April, and close to its record of $64,895.22.
Bitcoin has been known for its volatility throughout its 13-year history. This month, it rose by 40% on the hope that bitcoin ETFs will allow billions of dollars to be managed by large investors.
However, analysts cautioned that the fund would not invest in bitcoin directly but rather in Chicago-traded futures. This means that any immediate impact on flows could be limited.
However, speculators bet that its launch will signal a positive change in spot prices.
Bitcoin futures traded at $62,380 last week, up 1.2%
This could increase the buying pressure on CME and cause open interest to rise. Arcane Research cryptocurrency analysts stated in a note that this will draw more cash and carry opportunities, which could lead to increased buying pressure in spot markets.
In response to rising interest in digital assets, crypto ETFs were launched in Canada and Europe this year. VanEck, Valkyrie and other fund managers are pursuing U.S.-listed products for ETFs. However, Invesco has dropped plans to launch a futures-based ETF on Monday.
The Valkyrie Bitcoin Strategy ETF was approved by the Nasdaq Friday. Grayscale, the largest digital currency manager in the world, has plans to convert the Grayscale Bitcoin Trust into an ETF that tracks spot bitcoins, according to the company.