The First Bitcoin Futures ETF to Debut This Week

According to ProShares, the first Bitcoin futures ETF is set to launch this week on the NYSE.

The ProShares bitcoin-linked exchange-traded fund will make its debut officially on Tuesday.

While the futures-based ETF won’t allow investors to buy bitcoin directly, it will track the bitcoin futures market. A futures contract is an agreement to buy or sell an asset at a future date at an agreed-upon price. A futures-based ETF tracks cash-settled futures contracts, not the price of the asset itself.

The ETF will trade under the ticker “BITO” according to the company.

“We believe a multitude of investors have been eagerly awaiting the launch of a bitcoin-linked ETF after years of efforts to launch one,” ProShares CEO Michael L. Sapir said in a statement Monday.

“BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider … or are concerned that these providers may be unregulated and subject to security risks.”

Bitcoin soared on Monday more than 2% to hit as high as $62,041.84 according to Coin Metrics data. Going over $64,800 would represent a new all-time high for the cryptocurrency.

A second futures-based ETF could also come this week.

“This will be probably the biggest endorsement from the SEC for crypto,” said Ian Balina, CEO of the data and analytics firm Token Metrics.

According to Balina, regulators globally have been at odds with the crypto industry for years and “impeded the acceptance of crypto” by retail investors. “This will be a floodgate of new capital and new people into the space.”

“The all-in cost of a futures-based ETF could be in the 5% to 10% range once you take into account the annualized roll yield,” said Matt Hougan, chief investment officer at Bitwise Asset Management, which has its own application for a bitcoin futures ETF in line at the SEC.

“Futures-based ETFs are also more confusing,” Hougan added. “They have challenges like position limit and official dilution, and they can’t get 100% exposure to the futures market.”
There are four bitcoin futures ETFs lined up for review in October, from ProShares, Valkyrie, Invesco and Van Eck.

“The bitcoin market has matured to the point where the CME bitcoin futures market is actually the leading source of price discovery in the entire bitcoin world,” Hougan remarked. “Prices move on the CME market before they move on Coinbase, Kraken, FTX … and as a result it satisfies the SEC hurdle for the potential approval of a spot-based ETF.”

“The crypto market was first led by retail exchanges like Coinbase and then dominated by things like BitMEX and Binance, and no one has updated the record or done the homework, and the homework shows the market has changed,” Hougan said.