After falling below $30,000 in June, Bitcoin (Bitcoin) After a nearly four-month rebound, the value has appreciated by more than 100%. On Friday, it regained the $60,000 level after the close by a surge of 7.56%. The subsequent rebound was attributed to the excitement of the US Securities and Exchange Commission giving the green light to the ProShares Bitcoin Futures Exchange Traded Fund (ETF). Since then, Bitcoin has successfully defended its current price level and is getting closer and closer to its highest historical valuation of $64,899.
Listing of ProShares Bitcoin Strategy ETF on Tuesday It is believed to provide an additional impetus for the legitimacy of Bitcoin and cryptocurrencies to become mainstream. However, a key fact about the new Bitcoin ETF is that it does not invest directly in Bitcoin, but allocates part of its assets to BTC futures contracts.
“Bits”
ProShares Bitcoin Strategy ETF is listed as “BITO” on the New York Stock Exchange and is the first of its kind. Some people believe that this ETF has been brewing for 10 years because several Bitcoin ETFs were either blocked by the US Securities and Exchange Commission. Completely blocked by the committee, or SEC.
WisdomTree and VanEck’s Bitcoin ETF are some high-profile applications that are still in a state of uncertainty. ProShares was approved because of a special difference: ProShares Bitcoin ETF is a futures-based ETF, and it also complies with mutual fund rules.
U.S. Securities and Exchange Commission like This structure is due to its lack of jurisdiction over cryptocurrency trading venues that are not registered as exchanges in the United States.
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Fund details
As stated in the ETF’s prospectus submitted to the US Securities and Exchange Commission, the fund allocates 25%-30% of its assets to Bitcoin futures contracts. It also pointed out that it plans to invest in ETF securities and other collective investment vehicles organized and traded in Canada.
These positions are designed to manage inflows and outflows in response to unusual market conditions, increased margin requirements, or the fund’s exposure to BTC futures has become too impractical. A larger portion of the fund’s assets will be used in money market instruments and then broken down into U.S. Treasury bills, repurchase agreements, and reverse repurchase agreements.
Increase mainstream acceptance
As mentioned earlier, Bitcoin ETFs help the entire market gain access, just like Coinbase is listed on the stock exchange Earlier this year. This is because investors who may not be able to directly use cryptocurrency but have a brokerage account will have the opportunity to access Bitcoin.
ProShares CEO Michael Sapir said in a statement that BITO provides risk exposure for investors who buy stocks and ETFs, but may not necessarily want to experience buying bitcoins from exchanges or setting up wallets. trouble.
BITO can also become a pioneer in other investment products.On the one hand, Grayscale Investments, the largest digital currency asset management company, has planned Convert its flagship GBTC to ETF “Once the US Securities and Exchange Commission issues clear and formal instructions,” Grayscale Communications Director Jennifer Rosenthal confirmed. Grayscale CEO Michael Sonnenshein also Said After BITO is successfully listed, ether-based ETFs may follow suit.
In addition, another futures-based Bitcoin ETF will also make its debut this week.U.S. Securities and Exchange Commission documents show that it Accept registration request for Valkyrie’s Bitcoin Strategy ETF The stock will be listed on NASDAQ.Melanion Capital, an investment company headquartered in France, will also launch its own ETF pegged to Bitcoin on Friday After obtaining the consent of the French financial regulator AMF. The fund called Melanion BTC Equities Universe UCITS ETF invests in a diversified basket of stocks related to the daily price movements of Bitcoin and will be listed on the Euronext Paris.
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Increase in open interest
Active Bitcoin trading activities have also led to an increase in the open interest of BTC futures. According to data from the cryptocurrency exchange Bybit, the open interest of BTC futures reached USD 23.1 billion on October 18. This figure approached its peak in April, when the total number of open positions on multiple exchanges was US$27.38 billion.
So far, the exchange with the highest contract value is Binance, which is valued at $5.3 billion.The Chicago Mercantile Exchange Group (CME) ranked third with $3.5 billion, despite recent open futures contracts A new eight-month high. Open interest refers to the number of unsettled futures contracts. It is usually used to determine the strength of a trend or market sentiment.
The recovery of Bitcoin has led many investors to believe that the price of BTC may soar further – even if many people think that the newly listed Bitcoin Bitcoin ETF is priced A few weeks ago. Therefore, the bullish argument is back, echoing the bets made by investors at the beginning of the year.
Futures contracts with a settlement date in December were as high as $74,000 at the beginning of the year. During the market cooling-off period, this situation has decreased, but it is again consistent with rising spot prices.
Bets with a Bitcoin price of $100,000 are so popular that centralized financial institutions such as Standard Chartered Bank also offer the same bets. Price target for this year or early 2022.
One measure to assess whether higher prices are feasible in the future is the growth of wallet addresses.Adoption plays an important role in this regard, although Brazil is not yet ready join in When El Salvador makes Bitcoin a legal tender, such moves may increase the number of new wallets.
Data shows that since October 2020, the number of wallet addresses has shown a steady growth trend. There are approximately 77 million addresses now. In addition, there are data showing that the number of “hodlers” or addresses that have held Bitcoin for at least one year is also increasing.
Therefore, as new investment products related to Bitcoin may receive similar green lights in the near future, more institutions may participate. Even if there is only BITO, there will be new investor categories, including heavyweight investors in the form of (401k) pension funds and retirement accounts. But regardless of whether Bitcoin reaches $100,000 or not, the new Bitcoin ETF at least shows that Bitcoin is a respectable investment.
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