First Bitcoin Futures ETF to Launch on NYSE, Marking a Milestone for Crypto Adoption
The long-awaited launch of the first bitcoin-linked exchange-traded fund (ETF) is set to take place on Tuesday, marking a significant moment for the crypto industry. ProShares confirmed that its Bitcoin Futures ETF will begin trading on the New York Stock Exchange under the ticker symbol “BITO.”
“We believe a multitude of investors have been eagerly awaiting the launch of a bitcoin-linked ETF after years of efforts to launch one,” said ProShares CEO Michael L. Sapir. “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.”
A Regulatory Breakthrough for Crypto
Bitcoin’s price surged over 2% on Monday, reaching $62,041.84, according to Coin Metrics, with investors watching closely to see if it will surpass its all-time high of $64,800 this week.
The launch of a bitcoin futures ETF represents a major regulatory achievement for the crypto industry, which has long sought legitimacy within traditional financial markets. Three other bitcoin futures ETFs are expected to move forward with their launches this month, with a second ETF potentially going live as soon as this week.
“This will be probably the biggest endorsement from the SEC for crypto,” said Ian Balina, CEO of Token Metrics, highlighting how global regulators have historically been hesitant to embrace the industry. “This will be a floodgate of new capital and new people into the space.”
Futures-Based vs. Spot Bitcoin ETFs
While this ETF offers exposure to bitcoin, it does not allow investors to buy bitcoin directly. Instead, it tracks cash-settled bitcoin futures contracts, which means investors are speculating on the future price of bitcoin rather than holding the asset itself.
Since 2017, numerous asset managers have sought SEC approval for a spot bitcoin ETF, which would directly hold bitcoin. However, past attempts were rejected due to concerns about market manipulation. The SEC, now led by Chair Gary Gensler, has signaled a preference for futures-based ETFs, leading to a rush of applications in recent months.
Investing in a futures-based ETF is different from holding bitcoin directly. A futures contract is an agreement to buy or sell an asset at a future date at an agreed-upon price. “The all-in cost of a futures-based ETF could be in the 5% to 10% range once you take into account the annualized roll yield,” noted Matt Hougan, CIO of Bitwise Asset Management, which also has a bitcoin futures ETF application pending with the SEC.
The Path to a Spot Bitcoin ETF
Currently, four bitcoin futures ETFs—ProShares, Valkyrie, Invesco, and VanEck—are under SEC review, with approvals likely unless the regulator intervenes. Many in the industry hope that these futures-based ETFs will pave the way for a spot bitcoin ETF in the future.
Market maturity plays a crucial role in regulatory approval. Previously, the SEC challenged the crypto industry to demonstrate a robust, regulated market for price discovery. Recent research from Bitwise suggests that the CME bitcoin futures market is now the primary source of bitcoin price discovery, surpassing exchanges like Coinbase and Kraken.
“The bitcoin market has matured to the point where the CME bitcoin futures market is actually the leading source of price discovery in the entire bitcoin world,” Hougan stated. “Prices move on the CME market before they move on Coinbase, Kraken, FTX.”
With growing institutional participation and regulatory acceptance, the crypto industry is inching closer to securing a fully-fledged spot bitcoin ETF. Until then, futures-based ETFs like BITO represent a key step toward integrating bitcoin into mainstream investment portfolios.