Same Action – Different Result
Over the past few weeks, nothing has moved digital asset markets like the various now-launched ETFs. When the ProShares Bitcoin Futures ETF (BITO) first launched it was able to capitalize on a first-movers advantage, closing the day up over 2.5%.
Mere days later, Valkyrie saw its similar Bitcoin Strategy ETF launch on the Nasdaq, but with less impressive results, closing the day down almost 4.5%. This was unfortunately a result of poor timing, with the entire digital asset market taking a downturn heading in to the weekend.
With the VanEck Bitcoin Strategy ETF launching on Oct. 25th, it should be interesting to see which direction it swings.
With the ProShares Bitcoin Futures ETF launch coming in as one of the most successful of its kind (of all time) – boasting over $1 billion AUM within its first 48 hours – it has created an unexpected problem for itself.
Under its current structuring, the fund it only permitted to have a maximum of 2000 contracts open for each month. Despite only being active for days, it is already nearing this limit for both October and November. This has reportedly prompted ProShares to filed for an exemption on these limits, as there is a clear and overwhelming demand for its product.
Next Up…Ether ?
Although limitations surrounding the Bitcoin Futures ETFs have arisen, their launches have been overall a positive event. Bitcoin hasn’t imploded, volatility hasn’t skyrocketed, and a broader range of investor now has access to exposure of the worlds top digital asset – as indirect as it may be. With this being the case, what can we expect to see next for such products?
While some continued to vie for a true spot-market Bitcoin ETF, there appears to be a general consensus that it is a futures based Ethereum ETF which will be approved next. Not only has Ethereum held firm to the #2 digital asset for years, it is one of the few assets to have benefited from top regulators explicitly stating that it is NOT a security.
Based on the popularity of Ethereum, strength of its network, status among regulators, and existing futures products, it is not a stretch to imagine an Ethereum Futures ETF launches in the near future.
Is the activity seen over the past few days unexpected? No. In the week prior, the overall digital asset market had an astounding run-up, with BTC posting new all-time-highs. Being in uncharted territory means that everyone holding Bitcoin was in the black (excluding trading activity). As such, there was bound to be scores of investors looking to take advantage by locking in profits.
Now that this short period of consolidation has occurred, with BTC bulls successfully defending the $60,000 marker, it appears as though BTC and the market at large is poised to continue its impressive run upwards towards the vaunted $100,000 threshold.
In the meantime, we have seen the BTC drop from ‘extreme greed’ to ‘greed’ in the past few days. With past bull markets continuing until the mid-90’s, the current level of 72 would seemingly indicate that there is still room to grow, and that $100,000 BTC is not a far-fetched idea.