Crypto ETFs Surge on Leveraged Bitcoin ETF Approval, Spot Bitcoin Hopes

Senior ETF Analyst

Jun 23, 2023

Reviewed by: Lisa Barr

Edited by: Lisa Barr

The price of bitcoin surged this week as spot exchange-traded fund hopes picked up steam. The world’s most valuable cryptocurrency by market cap jumped from around $26,400 to over $30,000 in the five days through June 23.

On Friday, the SEC approved the Volatility Shares 2x Bitcoin Strategy ETF (BITX), the first U.S.-listed leveraged bitcoin futures ETF, which is scheduled to start trading Tuesday. The launch appeared to further boost crypto investors’ enthusiasm.

The ProShares Bitcoin Strategy ETF (BITO), which closely tracks bitcoin prices, gained 14.3% in the period—matching the return for underlying bitcoin prices.

BITO holds bitcoin futures contracts traded on the CME. But despite mirroring moves in bitcoin, BITO isn’t what most investors want. Its $1 billion in assets under management is relatively modest for being the largest crypto-related ETF listed in the U.S.

Instead, investors have been pining for a spot bitcoin ETF, one that has more direct ownership of bitcoin. A spot bitcoin ETF, like the proposed iShares Bitcoin Trust, would, through a custodian, own private keys associated with bitcoin.

Such a spot ETF might attract many more investors than BITO has, fueling strong demand for bitcoin itself. At least, that’s the assumption traders were working with when they pushed bitcoin over $30,000 this week.

Since BlackRock filed paperwork with the SEC for a new spot bitcoin ETF on June 15, the prospect of a spot bitcoin ETF has been the talk of the crypto town. It’s given renewed hope to an asset class and an industry that has been beaten and battered by bursting bubbles, fraud and regulatory pushback.

Beyond Bitcoin

ETFs that hold crypto-related stocks, such as the Amplify Transformational Data Sharing ETF (BLOK), climbed to new 2023 highs this week.

BLOK is now up 40% year to date, while the Valkyrie Bitcoin Miners ETF (WGMI)—the best-performing crypto ETF of the year—is higher by 185%.

Shares of Coinbase, a poster child for the crypto industry, didn’t rally much this week, as concerns about the SEC’s lawsuit against the company weighed on sentiment. But other crypto companies like Marathon Digital Holdings took off.

The question now becomes whether this rally in crypto-related assets and stocks can sustain itself without fresh news on the spot bitcoin ETF front.

The last time bitcoin traded above $31,000 was a year ago.

Contact Sumit Roy @[email protected]

Sumit Roy

| Contact: [email protected]

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.

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