ETFs are known in investment circles as Exchange Traded Funds. Now, the popular low-risk investment type has found its way into the crypto sector with the introduction of Bitcoin ETF.
A Bitcoin ETF is a pool of bitcoin-related assets offered on traditional exchanges and to be traded as the typical ETF. One type of Bitcoin ETF is the Bitcoin Futures ETF. These are Bitcoin ETFs linked to Bitcoin future contracts, allowing investors to speculate on the future price of Bitcoin without holding the digital currency itself.
Although there have been several Bitcoin Futures ETFs to launch in the U.S., like the ProShares and Valkyrie Bitcoin Strategy ETF, none of them gained the approval of the U.S. Securities and Exchange Commission.
Only recently did the U.S. SEC approve the Volatility Shares 2x (BITX), the first leveraged Bitcoin Futures ETF. Here is all you need to know about the Bitcoin Future ETF!
Highlights of the BITX
On Friday, June 23, 2023, the U.S. SEC made a landmark move when it approved the Volatility Shares’2x Bitcoin Strategy ETF (BITX). The ETF offers leveraged long-term exposure to bitcoin futures contracts, allowing investors to speculate on BTC’s future price.
The BITX launched on June 27 on the Chicago Board Options (CBOE) BZX Exchange. It seeks investment results that correspond to twice the returns provided on the Chicago Mercantile Exchange (CME) Bitcoin Futures Daily Roll Exchange. With the introduction of the BITX, crypto investors no longer need a crypto exchange account and can gain bitcoin exposure through a traditional brokerage account.
Since its launch, the BITX has witnessed about $4.2 million in trading volume. The first 15 minutes of its going live saw a trading volume of $500k.
Before the approval of Volatility Share’s Bitcoin ETF application, similar institutions had made applications to the SEC. Valkyrie had made a leveraged ETF application in 2021 but withdrew it only three days after being instructed by SEC to do so.
However, with this first-ever approval of leveraged Bitcoin futures products, the SEC might be giving the green light on Bitcoin ETFs and allowing more comprehensive investment options in the crypto space.
Looking ahead
Bitcoin ETFs provide investors with the opportunity to invest in cryptocurrencies without the need to purchase and trade bitcoin. In addition, investing in a Bitcoin ETF cuts out the complex storage and security issues for investors.
Previous bitcoin ETFs launched in the U.S. have experienced significant growth but did not gain the approval of the SEC. Thus, recognizing BITX as a leveraged ETF by the SEC might allow other bitcoin futures ETFs to be introduced in the crypto space. Furthermore, it can strengthen an attraction for wary investors towards cryptocurrencies.
As an investor, evaluating the potential pros and cons of every investment, including a bitcoin future ETF before making any moves remains essential.
