Bitcoin rocketed to a new record midweek, fueled by the launch of the first U.S. exchange-traded fund, or ETF, linked to the cryptocurrency’s momentum. The digital currency has soared by 120% this year, touching an all-time high of almost $67,000 midweek, and Bloomberg notes fresh records “embolden” believers to further rally behind the crypto. The ProShares Bitcoin Strategy fund, which launched Tuesday, attracted $1.1 billion in its first two days — a record pace for an ETF. The Financial Times also notes investors are “dumping gold for cryptocurrencies” as they seek protection against rising inflation.
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Heavy demand for the first bitcoin ETF, which was listed yesterday. With $700m of trading volume, BITO attracted way more interest than the first S&P 500 ETF on its first day. But be wary of hidden costs! – The expense ratio (management fee) of 0.95%. That level would not be that high for esoteric assets, BUT the fund is not trading any esoteric asset. It is investing in CME-listed futures. So it is a high-margin product for the issuer. – More importantly, because the fund invests in futures, not in cash, it is exposed to the futures’s repo (aka the rolling cost). The repo trades around 17% right now. The fund will lose 15-20% per year in rolling costs! That makes it a VERY expensive vehicle.
– It will place its cash in T-Bills (<1Y), aka earn virtually no interest, but that’s standard these days.
– Its tax efficiency is still imprecise, and they could pass through to you. You may end up with tax bills as a shareholder. Oh, did I forget this? There is some imprecision on the long-term value of its asset and you should expect some volatility… #Bitcoin #BITO #BitcoinETF #ETFs #FinancialMarkets
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With Bitcoin’s recent all-time high and the launch of the first Bitcoin Futures ETFs, it is natural and expected that hysteria has ensued. With these new ETFs, however, a new age of digital assets due diligence has been ushered in for asset managers looking to gain exposure to the crypto asset class. IDX’s CIO Ben McMillan put his thoughts on paper on the topic of what investors need to know about these new Bitcoin products and their ETF structure. Read now: https://bit.ly/3DUNQzG
The first bitcoin futures ETF hit the market today. Watch now in Today’s Market Takeaways as I explain how it works, and why it might behave differently than a direct investment in bitcoin.
Crypto market cap hits new all-time high as BTC, ETH soar The total market capitalization of all cryptocurrencies rose to new all-time highs on Wednesday, capping off a dramatic months-long recovery that reaffirmed the bullish narrative for Bitcoin (BTC) and Ether (ETH). The crypto market cap — an important barometer for the overall health of the digital asset economy — reached a high above $2.63 trillion on Wednesday. That represents a gain of 5.9% over the previous 24 hours. A buying frenzy in the market lifted Bitcoin to new record highs, as the flagship cryptocurrency touched an intraday peak of $67,016.50. Ether, meanwhile, crossed the $4,000 mark for only the second time since May. With the exception of stablecoins, every cryptocurrency in the top-ten market cap rankings printed gains. The new market cap peak marks an important milestone for digital assets after a months-long correction during the summer threatened the bullish narrative. During the low point of the summer correction, the crypto market cap plunged below $1.2 trillion. A pair of Bitcoin ETF approvals in the United States appears to have sparked the latest rally for BTC and the broader crypto market, though bullish momentum has been building for months. A favorable macro environment, strong on-chain fundamentals and technical confirmation of a July bottom helped secure Bitcoin’s relief rally over the past three months. That Bitcoin has been the major catalyst for the relief rally is further reflected in the BTC dominance index, which has increased to 47.7% Bitcoin dominance bottomed near 39% in May during the height of the altcoin rally. Altseason Indicator, which tracks the extent to which altcoins outperform Bitcoin, is only at 15%. (In crypto, “altseason” refers to a period where altcoins outperform Bitcoin.)
There is a great deal of concern in the financial news media on how the new ProShares Bitcoin ETF which is linked to the Bitcoin futures at the CME Group are going to “hurt investors”. The concern is the annual returns are going to lag spot Bitcoin by as much as –25% to -33% annually. The ETF expense ratio of $BITO is 0.95% annually, and as you can see from the term structure below, the CME Group Bitcoin futures term structure is quoted fairly with neither too much negative yielding contango (upward sloping prices out in time) nor backwardation. (lower prices out in time) For now I’m going to believe the fears of investors getting “hurt” are slightly exaggerated, as the ETF has only traded for three days! Let’s see what the future holds. Typically, commodities which don’t store well such as natural gas, corn, wheat, soybeans, cattle, pork bellies and especially crude oil experience wild swings in pricing from one month to the next. Do you remember when front month crude oil traded at a negative -$40 per barrel? Of the 2,436 Exchange Traded Funds currently available for trade, I found 76 classified as Exchange Traded Notes. Many commodity-based ETF managers will “optimize” the weighting of the future contracts purchased to address investor concerns. For the time being let’s celebrate ProShares and the CME Group for bringing an ETF to the retail market. As we would say in the trading pit (this saying was directed at those who suffered from paralysis by analysis and afraid of making a trade) “Make the trade; manage the risk”. If your investment advisor doesn’t discuss cryptocurrencies consider switching advisors. Text ‘BLOCKCHAIN’ to 22828 to receive our newsletter Coinbase Grayscale Investments Cboe Global Markets #bitcoin #investments
ProShares Bitcoin Strategy ETF ($BITO) was about at $1 billion in total volume yesterday). It was by far the biggest Day One of any ETF in terms of ‘natural’ volume. It also traded more than 99.5% of all ETFs (including some big ones such $DIA, $ARKK or $SLV), defying most expectations.
Source: Eric Balchunas
#bitcoin #cryptocurrencies #etf
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After 1 day of trading the ProShares Bitcoin ETF traded just over US$1bn in volumes, with its assets under management sitting at US$571m, if that isn’t an indicator for the appetite for Bitcoin I don’t know what is! #bitcoin #etf
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With Covid-19 and lockdowns, it has been hard to keep apace with all the developments in the blockchain space. But in just 24 hours we have the following: 1) New bitcoin and total crypto market caps break their all time highs ($67k and $2.7 trillion respectively);
2) Russia says it may replace some of its USD reserves with digital assets;
3) Facebook’s crypto wallet is entering a pilot phase, in tandem with coinbase and paxos;
4) Coinbase signs deal with the NBA for crypto projects going forward (no doubt NFTs are involved);
5) A 2.2 trillion bond manager PIMCO says it will be investing more into bitcoin
6) Australia releases its formal report on blockchain, with a recommendation to create a new legal entity to recognize DAOs;
7) Tesla’s earnings report shows it did not sell down its digital assets over the last period.
8) Famous investor Ray Dalio says his view is bitcoin prevails over gold as a protection against inflation. 9) The first ever bitcoin ETF (futures at least) launches with the 2nd strongest volume in ETF history (now $1.5B daily). And that is just one day! #bitcoin #blockchain #ethereum #cryptocurrency