The first U.S. Bitcoin futures exchange-traded fund has finally begun trading, and its debut has certainly not disappointed.
The ProShares Bitcoin Strategy ETF, trading under the ticker BITO, jumped more than 3% in early trading. Within just 20 minutes about 6.4 million shares of BITO worth around $264 million changed hands, according to data compiled by Bloomberg.
Investors will be closely watching to see whether the price of Bitcoin can challenge fresh all-time highs just below $65,000. The ETF is linked to Bitcoin futures and has no direct impact on the spot price but sentiment around the approval has pushed it higher in recent days.
The price of Bitcoin spiked above $63,000 shortly after the ProShares ETF began trading, but has since fallen back to $62,500, up about 1.3% for the day.
Crypto stocks were mixed on a landmark day for the sector. Crypto exchange platform Coinbase Global (COIN) was 3% higher, while Bitcoin miner Marathon Digital (MARA) recovered from early losses to trade 1.7% higher and software firm MicroStrategy (MSTR), which holds more than $5 billion worth of the world’s largest cryptocurrency, fell 2.2%.
After eight years of rejections, SEC Chairman Gary Gensler opened the door in August when he said crypto ETFs that comply with its strict laws could provide investors significant protections.
More on Crypto
The SEC has not explained directly why it allowed the ProShares ETF to start trading but Gensler implied in a Tuesday interview on CNBC that it had to do with the fact that futures are already overseen by the Commodity Futures Trading Commission.
“I think what you have here is a product that’s been overseen for four years by the U.S. federal regulator, the CFTC. And that’s being wrapped inside of something that is within our jurisdiction called the Investment Company Act of 1940. So we have some ability to bring it inside of investor protection,” he said.
Gensler cautioned, however, that “it’s still a highly speculative asset class.”
ProShares isn’t the only Bitcoin-linked ETF. There’s a conveyor belt of Bitcoin-linked ETFs ready to launch in the months ahead, although Invesco put its futures ETF on hold late Monday without giving a reason.
Aside from the symbolic significance with regards to mainstream acceptance, there’s more at stake following what is likely to be a watershed moment for crypto.
The initial performance of the ETFs could dictate where the price of Bitcoin goes next. Robust demand for Bitcoin ETFs is what’s needed to break fresh records, Oanda analyst Edward Moya said, noting that if traders viewed the early performance as promising the next resistance would come from the $70,000 level. Conversely, lackluster trading volumes could trigger a selloff, he said.
It’s still early days but it’s been anything but a lackluster start.
Write to Callum Keown at [email protected]