Bitcoin hit 2 milestones this week. 2 experts break down why investing in a futures-based crypto ETF isn’t smarter than directly buying bitcoin.

Bitcoin etf banner
  • Bitcoin set a record high this week, after the first US futures-based crypto ETF made its debut.
  • But the new fund may not be the smartest, or more profitable, strategy for average retail investors, according to two experts.
  • “I think they’re better just purchasing bitcoin than to play the futures game at this point,” a private equity CEO said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

As the long-awaited bitcoin futures exchange-traded fund hit the market this week, investors are keen to know what this structure ultimately means for their portfolios.

The ETF structure itself was one of the most significant financial innovations when it was introduced in the 1990s as a type of investment that provides access to passive, indexed funds. Bitcoin has brought in a new era of innovation, but it remains in the nascent stage.

The asset set a new all-time high above $66,000 on Wednesday, a day after the ProShares Bitcoin Strategy ETF – the first of its kind – launched on the New York Stock Exchange.

While this development is a substantial achievement in acknowledging the legitimacy of the asset class, it’s noteworthy that within these types of ETFs, an actual bitcoin is neither bought nor sold during the execution of the trade and therefore has no direct impact on market supply.

And unlike stocks or bitcoin, futures contracts come with expiration dates and investor need to “roll” their positions into the next month to avoid taking physical delivery of the underlying asset. Regardless, the institutionalization of bitcoin is ultimately a good sign for investors – at least in theory.

But is a futures-based bitcoin ETF a smart strategy to implement?

Maybe not, according to Eric Schiffer, CEO of private equity firm Patriarch Organization.

“For the average retail investor, I think they’re better just purchasing bitcoin than to play the futures game at this point,” he told Insider in an interview. “They’re going to want to get far more educated and leave that work to quants and some of the big funds.”

But there is a huge appetite among audiences for regulated financial services rooted in the world of cryptocurrencies.

Schiffer, who is personally invested in crypto, said the launch of the first US bitcoin-based ETF “has raised the hormonal levels of investors in a positive way toward participating and also takes away some of this apocalyptic downside that crypto painted in the minds of those who saw it as nothing but a vicious sack of volatility.”

He expects more hedge funds and institutions to be willing to navigate to futures as a hedge “to benefit from the upside of the next version of the internet.”

Ben Johnson, Morningstar’s global director of ETF research, said in a recent interview these ETFs got the go-ahead because they don’t directly invest in bitcoin, but in an already established financial product.

If investors choose to invest in such a fund, they would have to navigate through not only the risks of a volatile asset, but also in maintaining their exposure to the cryptocurrency.

“By virtue of investing in actual bitcoin futures, what you see is that there are some issues most notably related to maintaining that exposure,” he said, explaining that such funds invest in the front-month futures contract.

“What can happen in the process is that if that next futures contract, or those next futures contracts, are trading at prices that are above the ones that the fund currently owns, they will be in effect systematically selling low and buying high.”

Johnson was referring to the structure of the futures market. When the market is in contango – where the forward price of a futures contract is higher than the spot price – investors in the ETF will essentially have to roll their positions forward at a loss, as they will sell the current contract and buy the next contract out at a premium. Backwardation, the opposite, is when the forward price of the futures contract is lower than the spot price.

This approach can be particularly costly, he said. Tax implications are another factor to consider, as the traditional ETF tax advantage that investors are accustomed to is eliminated in this case.

Cathie Wood seems to have a wait-and-see stance because of the potential of tax ramifications.

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US stocks rise as strong corporate earnings outweigh inflation concerns

A stock trader claps at the end of trade at the New York Stock Exchange
A stock trader claps at the end of trade at the New York Stock Exchange

US stocks notched new highs on Wednesday as strong strong corporate earnings outweighed inflation and supply chain concerns.

The benchmark S&P 500 closed higher for the sixth straight session, buoyed by stronger than expected third-quarter earnings reports. The Dow Jones Industrial Average scaled new intraday highs, though failed to hit a closing record. The tech-heavy Nasdaq slipped, dragged by Netflix’s outlook of decreased profitability.

A majority of companies that have reported earnings have beat analyst expectations so far. “Indeed, the selloff from September feels like an increasingly distant memory now,” Deutsche Bank analysts said.

Here’s where US indexes stood at the 4:00 p.m. ET close on Wednesday:

Equities have been boosted by strong earnings reports, defying more muted expectations due to ongoing supply chain disruptions that have pushed prices of goods higher and the persistent labor shortages that have slowed the economic rebound.

“We believe that the stock market has more to climb in this bull market and that some of the COVID-19 headwinds are receding even as inflation increasingly becomes a headwind,” Chris Zaccarelli, CIO at Independent Advisor Alliance, said in a Wednesday note. “Many companies continue to have pricing power, which should preserve corporate profits.”

Fundstrat Global Advisors on Wednesday formally raised its S&P 500 year-end target to 4,800, representing potential upside of about 7% as risk-on sentiment increases.

“The improvement in market technicals, such as clearing the 50-day moving average, is actually suggesting that underlying trends are getting stronger,” head of research Tom Lee said.

The yield on the benchmark 10-year Treasury note rose to 1.648% – a level last seen in May – compared to Tuesday’s 1.634%. Yields rise when bond prices fall.

In cryptocurrencies, bitcoin climbed to a record high of $66,909, a day after ProShares Bitcoin Strategy ETF had the second-biggest trading debut of all time.

If the bitcoin manages to see consecutive daily closes above former resistance at $65,000, Fairlead Strategies’ Katie Stockton believes it will hit $89,800, representing potential upside of 38% from the breakout.

Ahead, asset management firm VanEck looks set next week to launch an ETF tied to bitcoin futures after October 23 on the Cboe BZX Exchange, according to a company filing Wednesday with the Securities and Exchange Commission.

West Texas Intermediate crude oil rose 1.55%, to $84.25 per barrel. Brent crude, oil’s international benchmark, tacked on 0.78%, to $85.74 per barrel.

Gold jumped as much as 0.88%, to $1,784.69 per ounce.

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Bitcoin hits record high above $66,000 after blockbuster ETF launch

Bitcoin
Bitcoin

  • Bitcoin rose as much as 3.8% to a record high of $66,560.73 on Wednesday after a strong debut for the first exchange-traded fund tracking the asset.
  • The ProShares Bitcoin Strategy ETF saw more than 24 million shares change hands when it launched on Tuesday.
  • This has opened the road for bitcoin to hit $80,000, Jeffrey Halley, senior market analyst at OANDA said.
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Bitcoin climbed as much as 3.8% to a record high of $66,560.73 on Wednesday, a day after the first exchange-traded fund tracking the cryptocurrency had the second-biggest trading debut of all time.

ProShares’ Bitcoin Strategy ETF, which started trading on Tuesday, gives investors exposure to bitcoin via futures contracts rather than owning it outright. It is the first bitcoin futures ETF to gain regulatory approval in the US. It saw more than 24 million shares trade hands at its debut, according to Bloomberg data.

“The ETF will be a big factor for driving the price higher, as it allows a new wave of money to enter the market,” Marcus Sotiriou, Sales Trader at GlobalBlock told Insider.

Bitcoin has gained around 50% in the space of a month, driven by the growing chances of the approval of an ETF that would open the market to much bigger investors. That compares with a rise of around 4% in the S&P 500.

The blockbuster launch has given most market-watchers conviction that bitcoin is set to climb further.

“Bitcoin will be trading higher than the current price by the end of the year and could reach over $100,000, but this is a very psychological barrier that may be difficult to overcome,” Sotiriou said.

Bitcoin could even reach $168,000 by the end of the year because of the new ETF, Fundstrat said in a note on Monday.

“A close above $65,000 opens the road to $80,000,”Jeffrey Halley, senior market analyst from OANDA said in a note to clients Wednesday.

The SEC may approve two more bitcoin futures this month: the VanEck Bitcoin Strategy ETF, and the Valkyrie Bitcoin Strategy ETF. ETF provider and asset manager Invesco was originally on that list, but opted out this week.

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The debut of the first bitcoin futures ETF drew big demand, but retail investors mostly sat out, research firm says

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ProShares Bitcoin Strategy ETF debuts on the NYSE.

  • Overall demand was big for the debut of the first bitcoin-futures ETF, but retail investors contributed less than institutional buyers, says Vanda Research.
  • Retail buyers bought $7.68 million shares of the ProShares BITO ETF, behind Coinbase’s launch at $57 million.
  • Individual investors prefer buying single stocks rather than ETFs, said the firm.

The first bitcoin-futures exchange-traded fund logged near-record high demand on its launch day but participation by retail investors was lackluster, according to Vanda Research.

The ProShares Bitcoin Strategy ETF, which debuted Tuesday, was the second-most heavily traded fund debut ever, landing turnover of nearly $1 billion with more than 24 million shares exchanged, according to Bloomberg data. ProShares reportedly said its new ETF brought in $570 million in assets in its launch day.

Retail investors bought $7.68 million in BITO shares on Tuesday, but that’s well below the high-profile debut of Coinbase in April, when they bought seven times more of the crypto exchange’s stock, at $57 million, said Vanda Research in a note Wednesday. Its VandaTrack tool monitors retail-investing activity in 9,000 individual stocks and ETFs in the US.

“[Most] pundits interpreted the massive trading volumes as a roaring success for BITO. From retail investors’ perspective, it wasn’t as much of a blockbuster,” wrote Vanda analyst Giacomo Pierantoni and senior strategist Ben Onatibia.

They said the overall massive demand for BITO, an ETF that invests in bitcoin futures contracts rather than the actual digital currency, was likely from a combination of investment advisors, private banking clients, and funds shorting the ETF to gain from the contango. Contango is a market condition where prices for futures contracts are higher than the spot price.

Retail “investors are probably aware of the ‘contango trap’ which makes BITO a subpar instrument to gain exposure to bitcoin,” said Vanda. “The cost of rolling futures contracts and high management fees can result in a 10%-20% underperformance relative to bitcoin, according to Bloomberg estimates.”

Meanwhile, individual investors prefer buying single stocks rather than ETFs except when they buy the dip in broad-market ETFs like QQQ or SPY, the researchers said.

The popular Invesco QQQ Trust tracks the Nasdaq 100 Index of large-cap growth stocks including Apple, Microsoft and Tesla. The SPDR S&P 500 trust tracks the S&P 500 and is the largest ETF, with about $402 billion in assets under management, according to ETF Database.

Bitcoin during Wednesday’s session rose nearly 3% to trade above $64,470, approaching its all-time high of $64, 804.72.

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ProShares’ bitcoin futures fund is on track to be one of the biggest ETF launches ever, drawing massive demand on its opening day

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A banner for the ProShares Bitcoin Strategy ETF hangs outside the New York Stock Exchange.


The launch of the ProShares Bitcoin Strategy ETF is proving to be a hit with investors amid its first few hours of live trades.

The ETF, which gains exposure to bitcoin via futures contracts rather than owning it outright, saw more than 17 million shares trade hands at a price of at least $40 by early afternoon, making it one of the best ETF launches of all time.

With more than $700 million worth of the ETF traded, the ProShares Bitcoin Strategy ETF is already the fourth-best ETF launch of all time and on track to take at least third place by the end of the day, according to data from Bloomberg.

The launch easily beat the popular Invesco QQQ Trust ETF launch in March of 1999, when $265 million was traded on its first day. The best ETF launch of all time is the BlackRock US Carbon Transition Readiness ETF, which launched in April of this year and saw a one-day turnover of more than $1 billion, according to Bloomberg.

“It [ProShares Bitcoin ETF] has legit shot at $1 billion and top spot,” senior ETF analyst Eric Balchunas tweeted on Tuesday.

And first-year inflows into the fund could exceed $50 billion, according to a Monday note from Fundstrat’s Tom Lee. Such strong demand for the ETF could help drive bitcoin to $168,000, he said.

The ProShares Bitcoin Strategy ETF trades under the ticker symbol “BITO” and has an annual expense ratio of 0.95%. The ETF traded up as much as 5% in Tuesday trades, while bitcoin was up about 1%.

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The first-ever bitcoin futures ETF rises 5% in trading debut as SEC’s Gensler flags volatility

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Bitcoin.

  • The first-ever bitcoin futures ETF began trading Tuesday on the New York Stock Exchange.
  • The ProShares Bitcoin Strategy ETF tracks bitcoin futures rather than bitcoin itself.
  • The fund, which trades under the ticker BITO, rose 5%, while bitcoin itself rose 2%.

The first ever bitcoin-linked exchange-traded fund premiered on the New York Stock Exchange Tuesday – marking a long-awaited milestone for crypto enthusiasts.

The ProShares Bitcoin Strategy ETF, which invests in bitcoin futures contracts rather than the actual digital asset, began trading under the ticker symbol “BITO.” Shares rose 5% at $41.90 at 9:37 a.m. in New York.

Because the US Securities and Exchange Commission didn’t intervene in ProShares’ new listing within the 75-day filing period that ended Monday, the ETF was effectively approved by the regulator.

BITO can be bought and sold like a stock, ProShares said Monday, and it doesn’t require buyers to hold an account at a cryptocurrency exchange or to have a crypto wallet.

The listing is the first of its kind and one that crypto investors have been “eagerly awaiting,” the company said. Others like it may soon receive SEC approval as well, CNBC reported, including ones from Valkyrie and Van Eck, with dozens more awaiting the green light.

The SEC has been resistant in approving a bitcoin ETF. But, earlier this year, SEC Chair Gary Gensler began signaling a lack of opposition to one based on futures, which are contracts that buy and sell an asset at a certain time and price. In supporting the new funds, Gensler cited a 1940 law that provides protections for mutual funds and ETFs.

Despite allowing the ETF to begin trading, Gensler told CNBC Tuesday that, “It’s still a highly speculative asset class, and listeners should understand that underneath this, it still has that same aspect of volatility and speculation.”

Regulators have struggled with how to approach digital assets, and some investors have shunned the asset class for lack of regulatory clarity – even as the crypto market has ballooned to $2.6 trillion. Last week, crypto exchange Coinbase recommended creating a special regulator to oversee the crypto market.

With the new ETF trading, the price of bitcoin rose 2% to $$62,725.18 at 9:34 a.m. in New York, continuing the digital asset’s rally this year.

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Bitcoin could surge to $168,000 as the arrival of a futures ETF drives new equilibrium in supply and demand, Fundstrat says

Bitcoin
Bitcoin

  • Bitcoin could surge to $168,000 as the launch of a futures ETF drives a new equilibrium in supply and demand, according to Fundstrat.
  • Fundstrat expects daily demand for bitcoin to rise by $50 million per day due to the new ETF.
  • With a daily block reward of $10 million in bitcoin, demand will be three times higher than supply, according to Fundstrat.
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Bitcoin could surge to $168,000 as the launch of a bitcoin futures ETF on Tuesday drives a surge in demand for the cryptocurrency among a wider swath of investors, Fundstrat said in a Monday note.

With bitcoin trading just 4% below its record high on Tuesday, a surge to $168,000 would represent potential upside of 170%. Fundstrat noted that the price target exceeds even its bullish year-end price target of $100,000 for the cryptocurrency.

“The price of bitcoin will continue to rise, well after actual approval of the ETF,” Fundstrat said.

Fundstrat expects the Proshares Bitcoin Futures ETF to see record inflows in its first year of trading, exceeding even the launch of the Invesco QQQ Trust in 1999, which brought in $36 billion. Fundstrat believes the Bitcoin $BITO ETF could see first yar inflows exceeding $50 billion, according to the note.

That’s because the bitcoin ETF will allow more investors to gain exposure to bitcoin via their brokerage and retirement accounts, where a large sum of money already sits. All-in, the launch of the new bitcoin futures ETF could drive $50 million per day in daily demand for bitcoin, according to Fundstrat.

With bitcoin block rewards at $10 million per day, the equilibrium between the supply and demand of bitcoin will not be balanced unless the price of bitcoin moves significantly higher.

“The equilibrium price to clear this, based on analysis by our data science team, is $168,000,” Fundstrat said.

With cryptocurrencies currently only about 1% of liquid assets, that number should rise as more investors are able allocate to the bitcoin futures ETF in more traditional investment accounts.

“This will drive higher asset prices via network effects,” Fundstrat concluded.

Bitcoin Supply and Demand Chart
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Investors now hold a record $72 billion in crypto assets, as fund managers piled into bitcoin ahead of the launch of the first futures ETF

Bitcoin
Bitcoin

  • Crypto assets under management hit a record $72.32 billion in the week to Friday ahead of this week’s ETF launch, CoinShares said.
  • Bitcoin saw inflows of $69.6 million in the latest week, the fifth week in a row of net increases.
  • ProShares’ Bitcoin Strategy ETF backed by bitcoin futures starts trading on Tuesday.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Institutional investors now hold a record amount of crypto assets under management, after a fifth straight week of inflows into bitcoin-backed products ahead of the launch of the world’s first futures ETF, according to weekly data from CoinShares on Tuesday.

In the week to October 15, total assets under management reached a record $72.32 billion, driven mostly by an inflow of $69.6 million into bitcoin, marking the fifth straight week of flows into the world’s largest cryptocurrency, CoinShares said.

Last week investors poured $225 million into bitcoin backed products, the most in seven months, as they awaited the approval of a bitcoin ETF by the Securities and Exchange Commission.

ETF provider ProShares’ Bitcoin Strategy ETF is due to start trading later on Tuesday in New York under the ticker “BITO”.

“The recent decision by the SEC to allow a futures-based ETF in the United States could prompt further significant inflows in the coming weeks, as US investors begin to add positions,” CoinShares said.

Bitcoin is holding around $62,000, its highest in around six months, thanks to investor interest in the futures ETF.

Bitcoin products have been more popular than other crypto-assets in recent weeks because of the ETF news. Ethereum products saw $0.9 million worth of outflows, its second week of outflows, while, solana backed assets saw $0.3 million worth of outflows.

Among the altcoins, polkadot products drew in the most capital, as inflows reached $3.6 million after setting a date for the parachain auction on November 11, which is when developers will be able to bid to build on the blockchain. Cardano-backed products saw inflows worth $2.7 million.

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The first-ever bitcoin ETF will start trading on Tuesday

Bitcoin cryptocurrency coin and the green line of a graph
  • ProShares said it will launch the first-ever bitcoin-linked exchange-traded fund in the US on Tuesday, Oct. 19.
  • The ETF will begin trading Tuesday on the New York Stock Exchange under the “BITO” ticker symbol.
  • Investors are still waiting for the SEC to launch a bitcoin ETF with the cryptocurrency directly as the underlying security.

The first-ever bitcoin-linked exchange-traded fund will begin trading on Tuesday, the provider ProShares said in a statement. The launch will mark another milestone in a notable year for the cryptocurrency market.

The ProShares Bitcoin Strategy ETF will trade under the ticker symbol “BITO” on the New York Stock Exchange, the company said. The ETF will invest primarily in bitcoin futures contracts and will not directly invest in bitcoin.

The company said BITO can be bought and sold like a stock and doesn’t require investors to hold an account at a cryptocurrency exchange or to have a crypto wallet.

“We believe a multitude of investors have been eagerly awaiting the launch of a bitcoin-linked ETF after years of efforts to launch one,” ProShares CEO Michael Sapir said in the statement. Sapir told The New York Times – who first reported the news – that the company would be the first to market with a bitcoin-futures ETF, to trade on the NYSE.

The arrival of the bitcoin-futures ETF comes as the red-hot cryptocurrency has shattered the $1 trillion market capitalization threshold, helping the broader crypto market grow to a market value exceeding $2 trillion.

Bitcoin climbed as much as 6% to $62,667.51 on Monday, just 4% below its all-time high of $64,869.78 reached in mid-April.

Bloomberg reported late last week the Securities and Exchange Commission was set to allow the first US bitcoin futures to start soon.

Dozens of companies are still waiting for the SEC to approve an ETF with the cryptocurrency directly as the underlying asset.

Read more: A crypto trader and consultant shares why he believes bitcoin can hit $300,000 this bull cycle – and breaks down the 4 chart signals that he’s watching right now

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US stocks slip as China growth slowdown, energy crisis dampen bullishness

Traders work on the floor of the New York Stock Exchange (NYSE)
Traders work on the floor of the New York Stock Exchange.

US stocks slipped on Monday as a slowdown in China’s growth and a continuing energy crisis dampened investors’ sentiment.

The Dow Jones Industrial Average fell at the start of the trading week, so did the other two major indexes. Among the biggest drags is the mega-cap tech giant Apple.

Here’s where US indexes stood at the 9:30 a.m. ET open on Monday:

While China’s economy expanded by 4.9% in the third quarter, according to data from the National Bureau of Statistics, the growth was slower than the 7.9% rise the country tacked on in the previous quarter and was the nation’s weakest pace since the third quarter of 2020.

Industrial output posted its worst performance since the start of the pandemic, made worse by power shortages, supply-chain woes, and debt problems in its property sector.

Outside of China, the crises in commodities continued to hound global markets, particularly the ongoing energy crunch.

“There is also much discussion on how long-term forward-looking inflation expectations are now spiking,” Hans Mikkelsen, Bank of America Credit Strategist, said in a Monday note. “Obviously, there are many drivers in inflation – such as reopening related bottlenecks that also leave labor unions with more bargaining power, higher energy prices.”

Mikkelsen said the economy is now looking at a “high growth, high inflation environment, in which reopening trades and cyclicals outperform.”

Previously, Francisco Blanch, Bank of America Global Commodities and Derivatives Research Head, provided Insider with four possible paths he sees through early 2022 from an economic crash to an interest rate hike.

Oil prices rose Monday. West Texas Intermediate crude tacked on 1.59% at $83.59 per barrel. Brent oil, the international benchmark, added on 1.10% to $85.79 after notching its eighth consecutive week of gains last week in what is so far its longest streak since a 10-week period through April 1999.

Gold dropped 0.46% to $1,762.79 per ounce.

The 10-year Treasury note yield edged up to 1.619% from Friday’s 1.574%. Yields rise when prices fall.

In cryptocurrencies, bitcoin surged 5.5% to $62,667 ahead of an imminent exchange-traded fund approval this week. Bitcoin’s rally has pushed the entire cryptocurrency market capitalization above $2.6 trillion over the weekend for the first time since May.

Meanwhile, Square CEO Jack Dorsey said his digital payments company is weighing up whether to create a simple-to-use bitcoin mining rig and laid out how it could help the industry.

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