Bitcoin Futures ETF Launch On Fire

October 19, 2021

The ProShares Bitcoin Strategy ETF (BITO) closed its first day of trading with approximately $1 billion, making it one of the most popular ETF launches ever.

After a particularly volatile hour of early trading in which its price reached a high of $42.55 per share and a low of $40.94, BITO rose beyond the $41 per share mark on calmer volumes over the past several hours. It ended the day at $41.94 per share.

 

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Bloomberg estimates the fund drew in approximately $993 million at the closing bell, but volume figures cited by Yahoo Finance place the fund’s volume north of $1 billion.

As of 4:54 p.m. ET, the NYSE has recorded $1.01 billion in trades, including trades executed after the close.

Its dollar volume of approximately $968 million made it the second-largest ETF debut in history, according to data compiled by Bloomberg ETF analyst Eric Balchunas. Only the BlackRock U.S. Carbon Transition Readiness ETF (LCTU) had a larger first day, with $1.16 billion in volume upon its debut in April.

The price of bitcoin was swinging throughout the day, reaching an initial high of $62,969 at 9:37 a.m. ET, dropping to a low of $61,412 at 10:35 a.m. ET. It peaked toward the end of the trading day to briefly pierce the $64,000 mark and went as high as $64,264. The crypto hit its all-time high of $64,863 in April. 

BITO charges a 0.95% expense ratio, the same as the Valkyrie Bitcoin Strategy ETF (BTFD) that is currently awaiting clearance to list on the Nasdaq. That could come this week as well.

BITO and BTFD both primarily invest in bitcoin futures, although BITO reserves the right to purchase stakes in foreign ETFs and investment vehicles that hold bitcoin directly.

Both funds also gained clearance to list on their respective exchanges on Friday, which sent bitcoin soaring to a 7% gain during market hours.

The futures-based approach has some structural issues such as roll costs for keeping its contracts on the nearest month, but it’s the preferred method for SEC Chairman Gary Gensler, who hinted at his preference for futures-based bitcoin ETF strategies in August.

Invesco also had a bitcoin futures ETF filing that was to be effective as of Monday. However, the firm instead issued a statement yesterday announcing that it would not be launching a futures-based bitcoin ETF anytime soon but would be pursuing development of a physically backed bitcoin ETF with partner Galaxy Digital. 

Contact Dan Mika at [email protected], and follow him on Twitter

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