First US Bitcoin ETF (BITO) launches: Here’s what you need to know

Posted: 20 October 2021 8:48 pm
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Bitcoin passes another major milestone with its first US-listed ETF.

Bitcoin has taken another major step overnight, with the launch of the first US Bitcoin-linked exchange traded fund.

Following formal approval from the SEC last week, the United States' ProShares Bitcoin Strategy ETF – trading under the ticker BITO – launched on the New York Stock Exchange.

Investors do not own Bitcoin under the fund and instead will own CME Bitcoin futures contracts. In other words, they will be able to own contracts that speculate on the future price of Bitcoin.

This did not stop bullish investors from taking part, with the ETF gaining traction on its first day of trading.

Prior to the launch of the ETF, ProShare's CEO Michael L Sapir noted the new ETF can be sold like a traditional stock, eliminating the need for an account at a cryptocurrency exchange as well as the need for a crypto wallet.

"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 and creating a Bitcoin wallet or are concerned that these providers may be unregulated and subject to security risk," he said.

What happened in overnight trading?

The response to BITO was positive, with investors largely excited about the launch of the new ETF.

BITO's share price closed its first day of trading up 4.8% to US$41.94.

It added a further 0.24% in after-hours trading.

Stats released by Bloomberg showed BITO was the second-most heavily traded ETF for a first day of trading, with only BlackRock's carbon fund ranking higher.

Purchasing in Australia

Much like any other US stock, investors will be able to purchase the ETF through a US brokerage account.

John Winters, CEO and co-founder of Superhero, made special mention of the new ETF, noting his organisation was expecting strong interest in the currency and it will be available through Superhero.

"Our customers are asking for exposure to crypto through the platform and this is our first step in making Bitcoin and crypto more accessible," he explained.

Australian market set to follow

The Australian market is also inching towards a crypto-backed ETF.

BetaShares has announced it's launching a crypto-focused ETF on the Australian Securities Exchange (ASX).

While the ETF will not give investors direct exposure to cryptocurrencies, it will track the Bitwise Crypto Industry Innovators Index. Basically, investors are purchasing exposure to companies that generate their revenue through crypto business activities.

Impact on Bitcoin

The launch of the new ETF has had a positive impact on the underlying asset. Bitcoin's price is up 3.5% over the past 24 hours and up 14% over the last week to US$64,217.

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