Bitcoin Futures ETF Makes Successful Debut in the US

On the First Day, Opening Price Rose by 4.85%... Expectations for Spot ETF Launch

[Image source=AP Yonhap News]

[Asia Economy Reporter Gong Byung-sun] The exchange-traded fund (ETF) based on the representative cryptocurrency Bitcoin futures has successfully completed its first trading session on the U.S. stock market. Contrary to expectations, it has also influenced the spot price of Bitcoin, but it does not appear to have led to a boom in the overall cryptocurrency market, including altcoins.

On the 19th (local time) at the New York Stock Exchange (NYSE), the asset management firm ProShares' Bitcoin futures ETF, 'ProShares Bitcoin Strategy ETF' (BITO), closed the session at $41.94 (approximately 49,231 KRW), up 4.85% ($1.94). ProShares' ETF started trading at an opening price of $40.88 and even reached an intraday high of $42.15, up 5.4%.

Bitcoin Futures ETF Debuts Successfully on U.S. Stock Market... Spot Bitcoin Price Also Rises

Contrary to initial expectations, the Bitcoin futures ETF influenced the spot price of Bitcoin. Since BITO tracks Bitcoin futures traded on the Chicago Mercantile Exchange (CME), the prevailing view was that it would not directly affect the actual Bitcoin price. However, as of 8:39 a.m. that day, Bitcoin recorded a 3.42% increase from the previous day, reaching 79.28 million KRW, marking the highest price in October.

The success of the Bitcoin futures ETF is presumed to have raised interest in Bitcoin. Although there were concerns that BITO's management fee of 0.95%, higher than the average fee of 0.71% for U.S. active equity ETFs, might hinder its popularity, BITO's trading volume reached $984 million that day. This is the second-highest volume after BlackRock's low-carbon transition ETF, 'BlackRock US Carbon Transition Readiness ETF,' which recorded the largest trading volume on its debut on April 8.

Furthermore, there are expectations that the success of the Bitcoin futures ETF could lead to the launch of spot ETFs, which is interpreted as influencing Bitcoin prices. The trading of Bitcoin futures ETFs is seen as a signal of institutional acceptance, making the launch of spot Bitcoin-based ETFs a matter of time. On the 17th, James Seyffart, a researcher at Bloomberg Intelligence, a research arm of Bloomberg, predicted, "This Bitcoin futures ETF launch will ultimately serve as a bridge to the launch of spot market-based ETFs."

If an ETF based on spot Bitcoin is launched, Bitcoin's market size is expected to grow larger than before. Currently, the U.S. ETF market's asset size is $6.8 trillion, about six times the market capitalization of Bitcoin. If a spot Bitcoin-based ETF directly related to Bitcoin is launched, Bitcoin's market cap could increase significantly, allowing it to serve as a safe-haven asset, according to industry observations.

Altcoins Remain Quiet... Will Altcoin-Based ETFs Also Launch?

However, it is uncertain whether this will lead to an expansion of the overall cryptocurrency market size. Unlike in the past when altcoins rose more sharply as Bitcoin increased, altcoins have recently shown a somewhat subdued performance. In fact, over the past month, while Bitcoin rose 46.29%, the representative altcoin Ethereum increased by only 27.60%. Other altcoins such as Bitcoin Cash and Ripple also rose by just 11.43% and 16.02%, respectively, during the same period.

An industry insider explained, "Because Bitcoin has symbolic significance, related ETFs were launched first, and in the future, ETFs based on major altcoins like Ethereum could also be launched on the U.S. stock market. This will further expand the size of the cryptocurrency market."