Key Takeaways:
- ProShares is set to launch the first-ever Bitcoin exchange-traded fund in the US.
- An exchange-traded fund based on bitcoin futures will vastly expand global crypto adoption.
ProShares to Launch the First US-based Bitcoin ETF
The first-ever US exchange-traded fund based on bitcoin futures is ready to start trading in the US this week. In other words, the move would make the largest cryptocurrency accessible to most US investors who have a brokerage account.
ProShares, a provider of ETF products, would most likely be the first firm to launch a Bitcoin ETF. The fund, named Bitcoin Strategy ETF, has been filed for approval by the Securities and Exchange Commission.
On that note, the regulatory agency, headed by Gary Gensler, is expected to give the green light as soon as today. It could, however, decide to delay, approve, or disapprove the application.
Technically, new ETF applications have a 75-day waiting period during which the SEC must conduct a review. If the agency does not object, the exchange-traded funds are approved and allowed to begin trading.
In the case of ProShares’ Bitcoin Strategy ETF, the 75-day review period expires today.
What Exactly is a Bitcoin ETF?
A bitcoin ETF consists of two things. First, there is the exchange-traded fund, which is essentially a basket of assets. More precisely, a fund that tracks the prices of the underlying financial products and people could buy it in one scoop. And second, a bitcoin ETF would track the price of bitcoin futures traded on the Chicago Mercantile Exchange (CME), and not bitcoin itself.
It’s important to note that investors who purchase the Bitcoin ETF will not be holding actual bitcoin. Instead, they will deal with bitcoin futures, which are derivative products to gain exposure to bitcoin’s price.
The benefit in trading bitcoin futures would be that investors would have protections as they will be trading the asset on regulated US exchanges.
The SEC has signaled it is not yet ready to allow actual bitcoin to be traded in regulated markets. Or as part of an exchange-traded fund due to the inherent volatility and sharp moves.
Why is Bitcoin’s Price Rising?
In conclusion, the news that the SEC may approve the first-ever Bitcoin ETF fueled a strong move in the cryptocurrency’s price. The price of bitcoin surged to a high of $62,800 and hovered just about 2% from its all-time record of $64,800.
Still, analysts point that the approval of an ETF based on Bitcoin futures would improve the crypto market’s legitimacy. In addition, it would also make the fast-developing market more accessible for institutional investors.