An advertisement for Bitcoin and cryptocurrencies is seen in Hong Kong, China September 27, 2021. REUTERS/Tyrone Siu
NEW YORK, Oct 19 (Reuters) – The first U.S. bitcoin futures-based exchange-traded fund began trading on Tuesday, sending bitcoin to a six-month high and just off its all-time peak, as traders bet the ETF could boost investment flows into cryptocurrencies.
The ProShares Bitcoin Strategy ETF closed up 2.59% at $41.94 in its first day of trading, with around $1 billion worth of shares trading hands on Intercontinental Exchange Inc's (ICE.N) NYSE Arca exchange under the ticker BITO.
The greenlighting of the ETF by the U.S. Securities and Exchange Commission was seen as a watershed moment for cryptocurrencies and helped push the price of bitcoin as high as $64,367.14, its highest level since mid-April and near its record of $64,895.22.
Bitcoin, the world's largest cryptocurrency, is notoriously volatile, and has risen around 45% this month on hopes that the advent of U.S. bitcoin ETFs – several of which are in the works – will spur billions of dollars managed by pension funds and other large investors to flow into the sector.
On Tuesday, there were very few block trades in BITO, suggesting that smaller investors and high-frequency trading firms dominated trading, said Dave Nadig, chief investment officer and director of research at ETF Trends.
"I think what we saw today was retail, HFT algo trading trying to find the arbitrage, and a whole lot of institutions sitting on the sidelines and watching," he said.
Similar products were set to come to market, with Nasdaq Inc (NDAQ.O) having approved the listing of the Valkyrie Bitcoin Strategy ETF on Friday, while Grayscale, the world's largest digital currency manager, said it plans to convert its Grayscale Bitcoin Trust (GBTC.PK) into a spot bitcoin ETF. read more
Crypto ETFs have launched this year in Canada and Europe amid surging interest in digital assets. VanEck and Valkyrie are among fund managers pursuing U.S.-listed ETF products, although Invesco on Monday dropped its plans for a futures-based ETF.
The SEC has yet to approve a spot bitcoin ETF.
Bitcoin futures have been overseen by the Commodity Futures Trading Commission for four years and ETFs are regulated by the SEC, offering some level of investor protection, the SEC's chair, Gary Gensler, said on Tuesday.
"Yet it's still a highly speculative asset class and investors should understand that underneath, there is the same volatility and speculation," he told CNBC.
Bitcoin futures were up 4.85% at $64,640.
Our Standards: The Thomson Reuters Trust Principles.
Subscribe for our daily curated newsletter to receive the latest exclusive Reuters coverage delivered to your inbox.
Bitcoin hovered just below its record highs on Wednesday and the first U.S. bitcoin futures-based exchange-traded fund (ETF) looked set to open firmer after surging on its debut on Tuesday.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Information, analytics and exclusive news on financial markets – delivered in an intuitive desktop and mobile interface.
Access to real-time, reference, and non-real time data in the cloud to power your enterprise.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2021 Reuters. All rights reserved