ETFs listed — What’s next for Bitcoin?
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ETFs listed — What’s next for Bitcoin?

Bitcoin is a digital asset and payment system with an open source protocol that enables peer-to-peer transactions without the need for central authorities. It was created by Satoshi Nakamoto in 2009 as a decentralized form of money.

The bitcoin etf approval is a topic that has been trending on the internet recently. There are many different opinions about what will happen next for Bitcoin.

Bitcoin (BTC) went on an almost four-month rebound after falling below $30,000 in June, gaining more than 100 percent. After ending the day with a 7.56 percent gain, it was able to reclaim the $60,000 level on Friday. The subsequent rise was linked to the anticipation of the SEC’s approval of the ProShares Bitcoin Futures exchange-traded fund (ETF). Since then, Bitcoin has successfully defended its current price level, edging closer to its all-time high value of $64,899.

The ProShares Bitcoin Strategy ETF’s launch on Tuesday is expected to provide Bitcoin and cryptocurrencies a boost in mainstream credibility. The new Bitcoin ETF, on the other hand, does not invest in Bitcoin directly, instead allocating a part of its assets to BTC futures contracts.

“BITO”

ProShares Bitcoin Strategy ETF, which trades under the ticker symbol “BITO” on the New York Stock Exchange, is the first of its type, according to some. Several Bitcoin ETFs have been held up or completely banned by the United States Securities and Exchange Commission, or SEC.

The WisdomTree and VanEck Bitcoin ETFs are two high-profile applications that are currently in limbo. ProShares received approval due to a unique distinction: the ProShares Bitcoin ETF is a futures-based ETF that is also registered under mutual fund regulations.

Because it lacks authority over bitcoin trading venues that aren’t regulated as exchanges in the United States, the SEC favors this arrangement.

Breakdown of the funds

According to the prospectus filed with the Securities and Exchange Commission, the ETF would invest 25%–30% of its assets to Bitcoin futures contracts. It also says it intends to invest in ETFs established and listed for trade in Canada, as well as other pooled investment vehicles.

These positions are used to control inflows and outflows in reaction to unexpected market circumstances, increased margin requirements, or if obtaining exposure to BTC futures becomes too difficult for the fund. Money market instruments will account for the majority of the fund’s assets, which will be split among US Treasury bills, repurchase agreements, and reverse repurchase agreements.

Increasing acceptability among the general public 

As previously said, a Bitcoin ETF, similar to Coinbase’s stock exchange listing earlier this year, allows the whole market to get access. This is due to the fact that investors who do not have direct access to cryptocurrencies but do have brokerage accounts will be able to invest in Bitcoin.

BITO, according to ProShares CEO Michael Sapir, offers exposure to investors who purchase equities and ETFs but don’t want to deal with the difficulties of purchasing Bitcoin through an exchange or setting up a wallet.

BITO may potentially serve as a model for future investment products. For example, Grayscale Investments, the world’s biggest digital currency asset manager, has stated that it intends to convert its flagship GBTC into an ETF “as soon as there’s a clear, official signal from the SEC.” After BITO’s successful listing, Grayscale CEO Michael Sonnenshein predicted that an Ether-based ETF will follow following.

Aside from this, a new Bitcoin ETF based on futures is scheduled to launch this week. According to SEC filings, Valkyrie’s Bitcoin Strategy ETF shares have been approved for listing on the Nasdaq. Melanion Capital, a French investment company, is also planning to launch its own Bitcoin-linked ETF on Friday, after approval from the French financial regulator AMF. Melanion BTC Equities Universe UCITS ETF will be launched on Euronext Paris and will invest in a diverse basket of equities linked to the daily price fluctuations of Bitcoin.

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The level of open interest is increasing.

The increase in open interest on BTC futures is due to Bitcoin’s strong trading activity. Open interest for BTC futures hit $23.1 billion on Oct. 18, according to data from cryptocurrency exchange Bybit. The number reached a high point in April, when total open interest on several exchanges reached $27.38 billion.

Binance, with $5.3 billion in contract value, is now topping the exchanges with the largest dollar value of contracts. Despite its futures open interest recently hitting an eight-month high, the Chicago Mercantile Exchange Group (CME) is in third place with $3.5 billion. The amount of futures contracts that have yet to be settled is referred to as open interest. It’s often used to assess the strength of a trend or the mood of the market.

ETFs listed — What’s next for Bitcoin?

Bitcoin’s comeback has led many investors to think that the price of BTC may rise even higher, despite the fact that many thought the newly launched Bitcoin ETF was priced weeks ago. As a result, the optimistic narrative is resurfacing, mirroring what investors were banking on at the beginning of the year. 

The futures contract with a December settlement date started the year with values as high as $74,000. During a market cooling-off phase, this has shrunk, but it has re-aligned with the increasing spot price.

ETFs listed — What’s next for Bitcoin?

Bitcoin price predictions of $100,000 have become so popular that major financial institutions like Standard Chartered have set the same price goal for this year or early 2022. 

The increase of wallet addresses is one indicator of whether higher pricing will be sustainable in the future. While Brazil is not yet ready to follow El Salvador in making Bitcoin legal money, such measures are expected to boost the number of new wallets.

The number of wallet addresses has been steadily increasing since October 2020, according to data. There are about 77 million addresses in the world today. Furthermore, data shows that the number of “hodlers,” or addresses that have maintained their BTC holdings for at least a year, is increasing.

ETFs listed — What’s next for Bitcoin?

As new Bitcoin-related financial products are expected to be approved in the near future, greater institutional involvement may be on the horizon. Even with only BITO, a new class of investors emerges, including industry giants such as (401k) pension funds and retirement accounts. Regardless of whether Bitcoin hits $100,000 or not, the new Bitcoin ETF establishes Bitcoin as a viable investment option.

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The new bitcoin etf is a new ETF that will track the price of Bitcoin. It was approved by the US Securities and Exchange Commission on December 20th, 2017.

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