Bitcoin Futures ETF Smashes New Record of $1B in AUM in Two Days
Is bitcoin better than gold? One evidence proves it is more popular. Let’s see why.
The 19th of October 2021 was a remarkable day in the cryptocurrency world. It marked the entrance of America’s first-ever bitcoin futures exchange-traded fund, the ProShares Bitcoin Strategy Fund (BITO). Unsurprisingly, to show it was a long-expected event, the fund surpassed $1 billion in volume. A new record since the first gold ETF (SPDR Gold Shares) in 2004 which crossed the mark after three days.
Before we look at the factors surrounding it, let’s define an ETF. Exchange-Traded Fund is a type of security that monitors commodities, sectors, indexes, or any other assets. With an ETF, securities can be traded like stocks even though they have other means of being exchanged. Although ETFs have been stereotyped to a group of investment assets, they can as well be used to track individual commodities,
Proshares- The First Bitcoin ETF
ProShares, the first Bitcoin Fund, was a subsidiary of ProFunds group which manages over $65billion in assets. Assets Under Management expresses the quantity of the total market value of all the financial assets of an individual or a big corporation or financial institution. Such financial institutions range from venture capital to a mutual fund to a hedge fund. The company manages more than $65 billion in other companies’ assets.
In the build-up to the day, there was palpable excitement about bitcoin being on the futures market. Bitcoin was about to be listed on the New York Stock Exchange (NYSE). Bitcoin price in the crypto market was roaring back up the charts in value after the liquidation in May. But the cryptocurrency forerunner had a great reputation preceding it. Bitcoin price has doubled in price this year and was willing to join the futures trading club. ProShares CEO Michael L. Sapir testified to the excitement of investors; He said a lot of investors have with bated breath waited after several determinative efforts in years to launch a bitcoin-linked ETF. The CEO further elucidated that futures trading of the crypto would give investors the flexibility of buying bitcoin as stock without the intermediary of a crypto platform. It helps investors that do not want to go through the trouble of creating another account with a crypto vendor, purchase from the stock market without being at the mercy of the free-for-all sector with unrestricted rules and security risks prone to most exchanges. Although a few exchanges like Redot and Binance, have proven their security prowess, the general market isn’t as safe as these
The crypto market has not been a favorite sector for the U.S government (or any government at that) and every crypto was being watched by the United States Securities Exchange Commission (SEC), not that they could influence digital assets (with it being a decentralized system). Bitcoin futures exchange was going to be a trailblazer to assume the trading genre on the stock exchange, so they needed the approval of the SEC.
The first day after being launched on the NYSE, they smashed past the half a billion-dollar value according to Eric Balchunas, the senior ETF analyst at Bloomberg. Four hours into the second day the $BITO was listed, it surpassed the $1billion record by $100,000. The record was clear. In two days it has exceeded the previous ETF record held by SPDR Gold Shares (GLD) which took one more day to get to the billion-dollar threshold in 2004.
Nate Geraci, the president of the ETF store, echoed what ProShares CEO Michael L. Sapir said pre-launch about the investor’s excited wait; She reiterated that in the history of the ETF it is the most successful launch. ProShares, with the Bitcoin-strategy ETF, has outdone itself. The popularity of this ETF created a frenzied demand for it, exceeding even the best of expectations prior to launch. There were clear indications that investors and advisors thirsted for the opportunity for trade with bitcoin price in their brokerage account.
More than 24million shares exchanged hands on the first day and since the ETFs went live it has surpassed the traded volume of $2billion. Bitcoin value rose up to $67,000. But there were some drawbacks. The value of bitcoin dropped later in the week and that was perhaps due to the profit distribution of BTC across the rest of the market.
Young Hungry Crypto Investors are Driven by Competition and Hype
One main influence constantly pulling at the strings of the crypto world is the constant hype that surrounds it. The volatility in prices and values of digital assets is mainly due to the public hysteria and excitement that surrounds them.
With an initial skepticism towards crypto in its nascent stages, citizens of nations never warmed up to the idea of a new fiat system. It had to take a few big investors’ beliefs in crypto for people to take the plunge. With the modern-day world controlled and oriented by social media, these platforms are endemic with so many opportunities. With the social media frenzy coupled with the need for youths to earn money as quickly as possible, the hype has been the perfect fuel filtering out of these platforms hence driving up the interest. For example, you are most likely to involve yourself with something you see and hear every time, and cryptocurrency has been ubiquitous. Financial Conduct Authority (FCA) conducted research across a group of individuals in the UK, 58% said they invested in any business opportunity because they constantly heard it on social media, and 69% of them invested in cryptocurrency without knowing the nuance or the level of security of where their money was invested in.
Then there are the pressures, the competition with friends and family. The urge to save face amongst your mates, to maintain prestige. This habit makes them delve into investment platforms such as crypto and forex. Of the 1,000 polled, 21% were willing to hold on to their recent business investment for a little over a year while 8% are willing to go the long haul, holding for as long as five years.
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