The First Bitcoin ETF Starts Trading in the US. What It Might Mean for the Crypto Market
On October 19, Bitcoin Strategy ETF shares from ProShares became available to New York Stock Exchange investors. So why can this be considered a pass to the digital asset market for large institutional players? Let’s try to figure everything out in this LATOKEN review.
The first Bitcoin ETF to start trading in the US
On October 19, the first US Exchange Traded Fund (ETF) based on Bitcoin futures of the Chicago Mercantile Exchange (CME Group) started trading on the New York Stock Exchange (NYSE). The Bitcoin Strategy ETF from ProShares has received SEC approval and will be traded under the ticker BITO.
Various companies, including ARK Investment, Fidelity Investment, VanEck, One River, and others, have been trying to get SEC approval to launch Bitcoin ETFs since 2013. Until now, the regulator has rejected all applications for the launch of exchange-traded funds based on crypto.
What is an ETF?
An ETF (exchange-traded funds) is an investment fund that forms portfolios of assets and issues their own shares, where each security is tied to a certain part of the fund’s assets. Thus, ETFs allow you to purchase an asset without actually owning it.
In the case of the Bitcoin Strategy ETF from ProShares, the fund will be pegged to Bitcoin futures, which have been traded on the Chicago Mercantile Exchange since 2017. ProShares warns potential investors that the price of bitcoin futures may differ from the price of the first cryptocurrency on the spot markets.
Once trading of the Bitcoin Strategy ETF starts, institutional and retail investors are now able to get access to Bitcoin directly through a regular brokerage account. Most likely, investors wishing to purchase the first cryptocurrency will not need to use the functionality of crypto exchanges and store digital assets.
Potential market prospects. LATOKEN review
The first US Bitcoin ETF launch is important primarily because it is yet another fully regulated instrument that allows us to invest in cryptocurrencies. Against the backdrop of crypto bans in China, a more loyal position of the United States may enable the whole industry to develop and grow further. It might happen even though the country does not yet have legislation regulating the crypto market.
Strict measures against cryptocurrencies began to be introduced in China at the end of May 2021. The local provincial authorities started to ban crypto mining, and crypto businesses started to leave the country. In September 2021, the PRC authorities completely banned cryptocurrency transactions, equating them with illegal financial activities.
The launch of the Bitcoin ETF may become one of the most important milestones of 2021. Crypto enthusiasts hope that there will be a large influx of institutional investors into the cryptocurrency market shortly. Many investors, who were very far from digital assets, have begun to show an active interest in Bitcoin and the crypto market in general.
The start of Bitcoin ETF trading in the United States may actually mean the adoption of the cryptocurrency by the regulator and permission for large institutional investors to enter the crypto market. We also want to remind you that Tesla was one of the first public companies to invest in Bitcoin directly.
Will the barrier that exists between potential investors and cryptocurrencies be overcome by Bitcoin ETFs? It’s too early to say, but at least we can hope so.
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