On October 19, shares of the Bitcoin Strategy ETF from ProShares will be available to investors on the New York Stock Exchange. Why can this be considered a pass to the digital asset market for large institutional players

On October 19, the first US exchange-traded fund (ETF) based on bitcoin futures of the Chicago Mercantile Exchange (CME Group) will begin trading on the New York Stock Exchange (NYSE). The Bitcoin Strategy ETF from ProShares has been approved by the U.S. Securities and Exchange Commission (SEC) and will be traded under the ticker BITO.

Various companies, including ARK Investment, Fidelity Investment, VanEck, One River and others, have been trying to get SEC approval to launch bitcoin ETFs since 2013. Until now, the regulator has rejected all applications to launch exchange-traded funds based on cryptocurrency.
What is an ETF

ETFs (exchange traded fund) are investment funds that form portfolios of assets and issue their own shares, where each security is linked to a certain part of the fund’s assets. Thus, ETFs allow you to purchase an asset without actually owning it.

In the case of the Bitcoin Strategy ETF from ProShares, the fund will be linked to bitcoin futures, which have been traded on the Chicago Mercantile Exchange since 2017. On the ProShares website, potential investors are warned that the price of bitcoin futures may differ from the value of the first cryptocurrency on spot markets.

After the start of trading of the Bitcoin Strategy ETF on the NYSE, institutional and retail investors will be able to access bitcoin directly through a regular brokerage account, explained Gleb Kostarev, director of Binance in Eastern Europe. According to him, investors wishing to purchase the first cryptocurrency will not need to independently use the functionality of crypto exchanges and store digital assets.
Perspective for the market

The launch of the first bitcoin ETF in the United States is important primarily because it is another fully regulated tool that allows you to invest in cryptocurrencies, according to a financial analyst of the crypto exchange Currency.com Mikhail Karkhalev. In his opinion, against the background of strict prohibitions against cryptocurrencies in China, a more loyal position of the United States allows the industry to develop and grow further, despite the fact that there is no legislation regulating the crypto market in the country yet.

Tough measures against cryptocurrencies began to be introduced in China at the end of May this year after the call of Vice Premier of the State Council of the People’s Republic of China Liu He to tighten the regulation of digital assets. The authorities of the local provinces began to prohibit the mining of cryptocurrencies, and the crypto business began to leave the country. In September, the Chinese authorities completely banned cryptocurrency transactions, equating them to illegal financial activities.

The launch of the bitcoin ETF is one of the most important milestones of 2021, Kostarev is sure. He believes that in the near future there will be a large influx of institutional investors into the cryptocurrency market. Many investors, who are often very far from digital assets, have been quite actively interested in bitcoin and the cryptocurrency market as a whole over the past year, explained the director of Binance in Eastern Europe. According to him, many such investors were stopped from investing in cryptocurrency by insufficient regulation of the industry, a low level of trust in it, as well as low awareness of digital assets.

“The barrier that exists between potential investors and cryptocurrencies, thanks to the bitcoin ETF, will be overcome,” Kostarev said.

The start of bitcoin-ETF trading in the United States actually means the adoption of cryptocurrencies by the regulator and permission for large institutional investors to enter the crypto market, said the head of the data analysis department. CEX.IO Broker Yuri Mazur. He recalled that Tesla was one of the first public companies to invest in bitcoin directly, but this strategy is not suitable for all organizations.
How Investors can Use Bitcoin ETFs

The Bitcoin ETF will be of interest not only to institutional investors, but also to retail investors, says Mazur. He explained that an exchange-traded fund based on cryptocurrency will be available on regular stock exchanges, which will greatly simplify the process of investing in bitcoin. Mazur called a lower entry threshold another advantage of the bitcoin ETF, since the cost of one share of the fund will be significantly lower than the price of bitcoin. According to ProShares, Bitcoin Strategy ETF trading will begin with a set price of $40.

Investors will be able to use bitcoin ETFs to diversify their portfolios, as the instrument will be less risky and volatile, Karhalev explained. According to him, thanks to the bitcoin ETF, investors will have less chance to run into fraudulent projects when trying to make money on cryptocurrency.

“Perhaps the profitability will not be as high as if you invested on a HYIP in Shiba Inu, but there are significantly fewer risks of losing all your capital,” Karhalev added.

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