Bitcoin at $60K Thanks To (Probable) Bitcoin Futures ETF
Here we go again. Bitcoin broke the $60,000 ceiling this morning, boosted by the probable debut of a Bitcoin futures exchange-traded fund (ETF) next week.
While a far cry from a “pure” Bitcoin only ETF — which the Securities and Exchange Commission has been stalling its decision on for months now — the new ETF is giving traders and investors hope that this could pave the way for an approval.
“It is clear that the recent spike in BTC’s price is directly related to the rumor that the SEC will move ahead with the U.S. first Bitcoin ETF approval,” Mikkel Morch, executive director and risk management at crypto hedge fund ARK36, told GOBankingRates in a statement. “It is becoming increasingly likely that at least one of the major contenders for a BTC futures ETF, such as Valkyrie or Van Eck, could be approved in the coming days and ahead of SEC’s hard November deadlines. As Valkyrie Investments updated its futures-backed ETF prospectus with the ticker BTF on Wednesday, the company is thought to have the biggest chances of winning this race (in) the near future.”
The ProShares Bitcoin Strategy ETF is scheduled to debut Tuesday at the New York Stock Exchange. Unlike Bitcoin ETF applications that SEC has rejected, the proposal by ProShares is based on futures contracts and were filed under mutual fund rules that SEC chairman Gary Gensler has said provide “significant investor protections,” Bloomberg reports. The ETF is based on bitcoin futures that trade on the Chicago Mercantile Exchange and seeks to provide capital appreciation primarily through actively managed exposure to bitcoin futures contracts, according to the SEC filing. It does not invest directly in Bitcoin.
There is, however, one catch: The ETF goes active unless the Securities and Exchange Commission objects to the filing, which can happen right up until midnight Monday, according to CNBC.
Bloomberg reports, however, that the Bitcoin futures ETF is “said not to face any opposition at SEC, according to multiple sources, and that it’s “pretty much done deal.””
This was somewhat corroborated by the SEC, who tweeted yesterday: “Before investing in a fund that holds Bitcoin futures contracts, make sure you carefully weigh the potential risks and benefits…”
Investors and investment managers have anxiously been awaiting a decision from the SEC on the approval of Bitcoin ETFs, which would have to be traded on the “exchange” — in other words, on the stock market (and therefore, only during the hours the stock market is open). Right now, cryptos don’t have any such limitations and can be traded anytime.
While several companies have filed crypto ETFs with the SEC, the commission has either rejected or delayed its decisions on many of them. VanEck, for example, registered its ETF in March, and the SEC usually takes 45 days to approve or disapprove a filing. The commission has issued several notices to extend the review period. Just last month, the SEC said it intends to take an additional 60 days to review the proposed rule change and “accordingly, designates Nov. 14, 2021, as the date by which the commission shall either approve or disapprove the proposed rule change.”
Morch adds, however, that a Bitcoin ETF approval is likely already priced in at this point. And that investors should be aware that the hopes for a sustained rally above the $60,000 barrier and further through the previous all-time high may as well turn into a “buy the rumor, sell the news” scenario.
“In any case, it is worth noting that the price went from $40,000 to $60,000 in an almost straight line and it would be natural for Bitcoin to take a breather after such a long run up,” he adds.
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Last updated: Oct. 15, 2021