What the first bitcoin futures exchange-traded fund means for the cryptocurrency industry

Asia's Tech News Daily
The value of Bitcoin (BTC) has exceeded the threshold of 66,895 dollars for the first time in his history.
Chesnot | Getty Images

This week marked a milestone for cryptocurrency as investors started trading the first U.S. bitcoin futures exchange-traded fund, exceeding other ETF launches, and another followed Friday. 

These funds invest in bitcoin futures contracts, or agreements to buy or sell the asset later for an agreed-upon price, rather than bitcoin directly.

The new products allow trading through regular investment accounts, bypassing the hassle and security concerns of cryptocurrency exchanges.

More from Personal Finance:
First bitcoin futures ETF starts trading. What to know before investing
Bitcoin is trading at more than $66,000. 3 things to think about before you buy
Here's why cryptocurrency crashes on weekends

While the new offerings fall short of what the industry eventually wants — ETFs investing in the currency itself — it didn't slow excitement for the first launch.

The ProShares Bitcoin Strategy ETF (ticker: BITO) saw one of the biggest first days on record for ETFs, raking in $550 million from crypto-hungry investors. Overall, more than $1.01 billion of shares changed hands, according to Morningstar. 

Moreover, the price of bitcoin spiked by more than 4% on Tuesday to $64,206.51, according to Coin Metrics, and soared to an all-time high of $66,900 on Wednesday, passing the previous intraday record of $64,899 from mid-April.

!function(){“use strict”;window.addEventListener(“message”,(function(e){if(void 0!==e.data[“datawrapper-height”]){var t=document.querySelectorAll(“iframe”);for(var a in e.data[“datawrapper-height”])for(var r=0;r

“The original intent [of bitcoin], and certainly still the intent of many, was to try to upend traditional finance,” said Ben Johnson, director of global ETF research for Morningstar.

“Instead, traditional finance has caught bitcoin in its tractor beam, reeled it in and turned it into something that Wall Street is going to make millions if not billions on by creating this whole new ecosystem,” he said.

Delayed bitcoin ETF approvals

Companies have been vying to release the first U.S. bitcoin ETF for nearly a decade. But the Securities and Exchange Commission has been slow to embrace the asset, citing concerns about the lack of regulation and the potential for fraud and manipulation in the bitcoin market. 

“General conservatism has been a pattern among U.S. regulators,” said Johnson, pointing to the landscape littered with bitcoin ETF filings being updated, abandoned applications and others collecting dust. 

Previously, most bitcoin ETF applications have been based on so-called spot markets, or investing in the currency directly, explained Stephen McKeon, associate professor of finance at the University of Oregon in Eugene and partner at Collab+Currency, a cryptocurrency-focused investment fund.  

However, there was a shift in August when SEC chairman Gary Gensler signaled the agency may be more open to a futures-backed bitcoin ETF under the Investment Company Act of 1940, which governs mutual funds and may offer “significant investor protection.”

I don’t think the SEC is in any big hurry to move forward and allow direct investment in bitcoin by ETFs anytime soon.
Ben Johnson
Director of global ETF research for Morningstar

The change prompted a flood of filings ahead of this week's approvals.

With the Commodity Futures Trading Commission overseeing U.S. bitcoin futures and the ETF wrapper falling within the SEC's jurisdiction, regulators may offer some investor protection, Gensler said on CNBC's “Squawk on the Street” this week. But it's still a “highly speculative asset class,” he warned.

While the SEC is expected to approve a handful of other bitcoin futures ETFs, it's unclear if and when the agency may greenlight an ETF investing in the currency itself.

“I don't think the SEC is in any big hurry to move forward and allow direct investment in bitcoin by ETFs anytime soon,” Johnson said.

What to know before investing

While there's immense interest in bitcoin futures ETFs, many experts suggest taking the time to learn more about the assets before investing.

“This is like Christmas in October for high-frequency traders,” said Johnson, explaining how massive price swings may appeal to certain investors.

Although the funds may have a high correlation with bitcoin, the asset won't mirror the currency's value because it tracks the price of futures contracts, which can be unpredictable.

“I think you have to be incredibly careful, and you have to prepare for immense volatility,” said Michael Bisaro, president of StraightLine Group in Troy, Michigan, which ranked 92nd on CNBC's FA 100 list for 2021.

There may be a place for it, but it can be “massively dangerous” if it becomes a large portion of someone's portfolio, he added.

However, a small amount of dabbling may not be a problem once retirement and other financial goals are on track, some advisors say.  

“I have no problem with clients investing in it out of their budget or lifestyle,” said certified financial planner Jordan Benold, partner at Benold Financial Planning in Prosper, Texas, explaining how some have “fun money” on the side.

But as more crypto-based products come to market, investors may soon face a dizzying array of portfolio choices.

“Bitcoin is just the tip of the iceberg,” said McKeon. “We're going to see ETFs with exposure to many different crypto assets in the coming years.”

Internet Explorer Channel Network
Asia's Tech News Daily
News Related


Tax credit aimed at low- to middle-income workers was expanded amid Covid-19. Who stands to benefit most

Joe Amon | MediaNews Group | Denver Post | Getty Images A temporary expansion of a tax credit aimed at workers with low to moderate pay could be extended for ... Read more »

Monzo valuation jumps to $4.5 billion after fresh funding round

A Monzo logo is seen in this illustration LONDON (Reuters) -British digital bank Monzo has completed a fresh funding round valuing the company at $4.5 billion, in a vote of ... Read more »

Elon Musk slams Biden's Build Back Better bill and its electric car incentives

Photograph: Mike Blake/Reuters Elon Musk criticized new incentives and infrastructure for electric vehicles in a huge spending bill backed by Joe Biden, saying he would “delete” the measures and even ... Read more »

Sandeep Kumar Sultania ceases to be chief financial officer of Srei Infrastructure Finance

Srei Infrastructure Finance on Wednesday said Sandeep Kumar Sultania has ceased to be the company’s chief financial officer (CFO). “Sandeep Kumar Sultania has ceased to be the chief financial officer ... Read more »

Top tips to prep your portfolio for 2022

Investors saw it all in 2021. Next year promises a little more upside, according to two top strategists. “Aside from the latest variant, and Covid in general, the underlying economy ... Read more »

FTSE cools on Omicron fears

Traders had a subdued day after 48 hours of expectations rising that the Omicron variant of Covid-19 may not be as concerning as first thought. But rising case numbers and ... Read more »

Scoop Up Big Gains With 4 Stocks Enjoying Rising Cash Flows

Making profits is undoubtedly a company’s primary goal, but having a healthy cash flow is imperative to its existence, development and success. And why not? Even a company generating profits ... Read more »

Are Options Traders Betting on a Big Move in Globalstar (GSAT) Stock?

Investors in Globalstar, Inc. GSAT need to pay close attention to the stock based on moves in the options market lately. That is because the Dec 23, 2021 $1.50 Call ... Read more »

Coronavirus Stimulus Checks to Workers: Your Job May Get You Some COVID Relief Cash

More federal stimulus checks are unlikely to come, but there are a few groups that are getting targeted payments from their state or local government. One such group is workers ... Read more »

Implied Volatility Surging for Invitae (NVTA) Stock Options

Investors in Invitae Corporation NVTA need to pay close attention to the stock based on moves in the options market lately. That is because the Jan 21, 2022 $40.00 Put ... Read more »

Here's Why Hold is an Apt Strategy for AXIS Capital (AXS)

AXIS Capital Holdings Limited AXS is poised for growth on solid Specialty Insurance, Reinsurance plus Accident and Health insurance portfolio, exit from underperforming lines, investment in more attractive markets, and ... Read more »

Pay Attention To Microcap Oil-Dri Corporation 

Supply Chain Costs Are Still Rising For Oil-Dri Corporation  Oil-Dri Corporation (NYSE: ODC) is not a big company but it is representative of an issue that has been and is ... Read more »

Kinsale (KNSL) Gains 33% in 6 Months: More Room for Upside?

Shares of Kinsale Capital Group KNSL have rallied 32.6% in the last six months against the industry’s decrease of 8.6% and the Finance sector’s decrease of 0.7%. The S&P 500 ... Read more »

Stock Market News for Dec 8, 2021

U.S. stocks closed higher for the second consecutive session on Tuesday as investors shrugged off fears of the Omicron variant of the coronavirus after reports suggested that the mutant is ... Read more »

How to Introduce Customer Financing in Your Business

If you’re going to sell expensive items to customers, you should be prepared to offer your customers some form of financing. Once offered, your customers can take advantage of loans ... Read more »

Company News for Dec 8, 2021

Shares of American Airlines Group Inc. AAL declined 0.2% after the company said that its Chief Executive Officer Doug Parker will retire on Mar 31, 2022 after being in the ... Read more »

Lockheed's (LMT) Arm Wins Deal to Support CH-53K Aircraft

Lockheed Martin Corp.’s LMT business unit, Sikorsky, recently won a contract for procuring long-lead items involving full-rate production of CH-53K aircraft. The Naval Air Systems Command, Patuxent River, MD, offered ... Read more »

Are Options Traders Betting on a Big Move in Sesen Bio (SESN) Stock?

Investors in Sesen Bio, Inc. SESN need to pay close attention to the stock based on moves in the options market lately. That is because the Feb 18, 2022 $2.00 ... Read more »

GATX Selects Lyons as New CEO, Incumbent to Retire in '22

GATX Corporation’s GATX president and CEO, Brian A. Kenney, is set to retire on Apr 22, 2022. He will continue to serve on GATX’s board of directors as non-executive chairman ... Read more »

Growing Pains Cut Into Casey's General Stores, Inc Profits

Inflation Takes A Bite Out Of Casey’s General Stores  Casey’s General Stores, Inc (NASDAQ: CASY) is a solid post-pandemic play and steady growth story and nothing has changed about that. ... Read more »

Australian house prices will keep rising and it's truly depressing for those hoping to get into the market

Photograph: Bloomberg/Getty Images In news that unfortunately will shock no one who has thought about buying a house at any point in the past year or so, the latest residential ... Read more »

Pound tumbles to 2021 low over fears of new Plan B virus curbs

Speculation that the Government could launch new Plan B coronavirus restrictions have caused the pound to drop to its lowest level in 2021 and weighed heavily on UK leisure firms. ... Read more »

Google's 2021 search list: Bernie Sanders ‘mittens' and Squid Game top the trends

Photograph: Brendan Smialowski/AFP/Getty Images Annual list reveals most searched-for terms globally related to sports, investing, Covid and skinny jeans Squid Game, Bernie Sanders’ mittens and how to wear skinny jeans, ... Read more »

New laser breakthrough could allow scientists to transform materials just using light

(Independent) Scientists say they have made a major step towards being able to transform materials using just light. The new breakthrough is a step towards the creation of things such ... Read more »

City watchdog reveals tech recruitment woes

Britain’s City watchdog has become the latest victim of the growing recruitment crisis in the UK as it revealed struggles to hire in-demand technology specialists. Financial Conduct Authority (FCA) chief ... Read more »

Why this month echoes December 2018 when stocks plummeted, according to top strategist

It's been a wild few weeks for markets. A sell-off last week dragged stocks sharply lower with the emergence of the omicron variant of the coronavirus, a more hawkish Federal ... Read more »

Bitcoin: Self-proclaimed creator wins right to keep $50B BTC fortune he claims to own

US Bitcoin Trial (Copyright 2021 The Associated Press. All Rights Reserved.) A computer scientist who claims to be the inventor of bitcoin has won a legal battle to keep hold ... Read more »

HelloFresh to double investments in 2022 as stock dives

BERLIN (Reuters) – German meal-kit operator HelloFresh plans to double its investments in production capacity, infrastructure and product development to about 450 – 550 million euros ($508.73 million to $621.78 ... Read more »

UK tax breaks for oil and gas under scrutiny from climate activists

The government failed to account for the billions of pounds in financial support it provides to the fossil fuel industry when deciding how much oil and gas to extract from ... Read more »

'Tis the season for holiday bills. Here's how to come up with a strategy now to pay them off

praetorianphoto | E+ | Getty Images With the holiday season comes a lot of gift-giving — and plenty of bills. That's why it's good to have a strategy now for ... Read more »

OneWeb to start making satellites in Britain in $3bn boost to space sector

A Soyuz-2.1b rocket booster with 36 British OneWeb satellites – Russian Space Agency Roscosmos/AFP via Getty Images OneWeb, the taxpayer-backed internet satellite operator, plans to spend $3bn (£2.2bn) to move ... Read more »

Amazon opens two more till-free Fresh grocery stores in London. Why?

(Amazon Fresh) Online giant Amazon further tightened its grip on London’s high streets today with the launch of two more checkout-free shops, one in Hounslow and one in Aldgate East. ... Read more »

Vishal Garg: Executives ‘resign' after Better.com boss fires 900 employees in Zoom call

Vishal Garg: Executives ‘resign’ after Better.com boss fires 900 employees in Zoom call Senior executives at an online mortgage company have reportedly resigned after its boss fired 900 of its ... Read more »

Exclusive-Generali eyes bigger stake in India businesses as Future seeks exit -sources

FILE PHOTO: Logo of insurance company Generali is seen on the company headquarters in Budapest By Aditya Kalra and Gianluca Semeraro NEW DELHI/MILAN (Reuters) – Italy's Generali is in talks ... Read more »

Cancer drug specialist Clinigen agrees to £1.2bn takeover

Photograph: Toby Melville/Reuters The cancer drug specialist Clinigen has agreed to a £1.2bn takeover deal from a London-based investment firm, becoming the latest big British company to be taken private. ... Read more »

German gas industry wants funding for 'turquoise' hydrogen

By Vera Eckert FRANKFURT (Reuters) – Germany's natural gas lobby on Wednesday called for 800 million euros ($902.56 million) in sponsorship to build plants to turn natural gas into hydrogen ... Read more »

Jim Cramer's investing club is bringing new people into the stock market

Stock picks are a common dinner-time conversation topic for the Greiner family these days. That wasn't always the case. Kerry Greiner, 49, and her husband have always saved for retirement. ... Read more »

How to Get Legal Help for LGBT People

If you or someone you know needs legal help with an issue related to their LGBTQ identity (for example, hate crimes, same-sex partner benefits, same-sex marriage, immigration, employment or housing ... Read more »

From the World Cup to London buses: former footballer now drives the number 185

(Supplied) THERE is a national shortage of bus drivers that is forcing people into cars and clogging up the roads, the industry warns. Help to ease this crisis comes from ... Read more »

Should Invesco S&P SmallCap 600 Revenue ETF (RWJ) Be on Your Investing Radar?

Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Invesco S&P SmallCap 600 Revenue ETF (RWJ) is a passively managed exchange traded ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic