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Highlights
- The Bitcoin ETF will mimic the price of the BTC. However, the difference would be that investing in a futures-based ETF will not be same as investing in Bitcoin.
- Bitcoin ETF is all set to make its debut at the NYSE with ProShares which will begin trading from Tuesday.
- Valkyrie, Invesco, and Van Eck too are expected to start its trading on the NYSE later this week.
The buzz in the crypto market clearly shows that investors around the globe are getting ready to embrace the arrival of Bitcoin ETF. As soon as the news surfaced on Friday that the US Securities and Exchange Commission has given a green signal, Bitcoin prices skyrocketed to US $60,000. Over the weekend, it further surged and was on the verge of touching its all-time high of US $64,000, the best so far this year in April.
The buzz is that the much-anticipated ETF from ProShares will begin trading from Tuesday on the New York Stock Exchange under the ‘BITO’ tag. Valkyrie, Invesco, and Van Eck too are expected to start its trading on the NYSE later this week. The excitement around the Bitcoin ETF launch is visible in the market as Bitcoin was trading well over US $62,000 on 19 October. At the time of writing (BST 2:05 pm), it was trading at US $62,179.21 with a 24-hour trading volume of US $38,34,56,38,644. Bitcoin is up 1.59% in the last 24 hours.
Also read: Can Bitcoin end 2021 with a price tag of $100,000?
What Is a Bitcoin ETF?
An Exchange Traded Funds (ETF) is a type of investment strategy that tracks the performance of a particular asset. The Bitcoin ETF will mimic the price of the BTC. However, the difference would be that investing in a futures-based ETF will not be same as investing in Bitcoin. Being a future-based contract, users will only be able to buy or sell the asset at a future date upon the agreed price. Besides, a futures-based ETF will be cash-settled futures contracts and not the price of the asset itself.
It is indeed a watershed moment for Bitcoin itself. The asset managers have been trying to get the ball rolling; however, they were stonewalled by the SEC headed by Jay Clayton. However, SEC Chair Gary Gensler hinted that he would be in favour of the bitcoin futures-based ETFs, which had all the asset managers and the market reacting favourably to the statement.
Also read: 'Psychic' Mr Goxx is more than a force to reckon with
Bitcoin ETFs in future
In a highly unregulated market, Bitcoin futures ETF is like a boon. It is expected to remove the major concerns regarding investors losing money or be exposed to scams. A few market experts are of the view that the approval of ETFs could be a blessing in disguise for the market as there would be more participants entering the market and it may give hedge funds a huge opportunity of arbitrage, which may push the price accordingly. Countries like Canada have already has been successfully running Bitcoin ETFs and US’s adoption will give the BTC much-needed push to ensure that the prices to go further up and attain new highs.
Besides, Bitcoin ETF would also give the opportunity to investors to gain exposure to Bitcoin without having the trouble to get to know the nuances of creating another account. The future of Bitcoin ETF is great considering this could well be a gateway for the market to recognize the potential that Bitcoin holds as possible mode of payment in the future and also what prospects it promises
Conclusion
Bitcoin Futures ETF is the right step in the direction of expanding the Bitcoin portfolio and it will also allow other investors to come into the market. As it is a futures-based contract, it could also give regulators some sort of relief. It may also give a template that going forward how cryptocurrencies can coexist with the traditional form of investment.
