First Bitcoin ETF opened, BTC surges above $ 63,000

The first exchange traded fund (ETF) backed by Bitcoin futures (BTC) went live late on the NYSE Arca exchange yesterday. The launch of the first Bitcoin ETF was seen as a success by analysts, with trading volumes showing great interest from traders and BTC surpassing USD 63,000 for the first time since April (at 17:09 UTC).

First Bitcoin ETF opened, BTC surges above $ 63,000

The ETF launched by ETF issuer ProShares with the ticker BITO went live yesterday at 09:30 EDT (13:30 UTC), with ProShares representatives ringing the opening bell on the New York Stock Exchange.

When the market opened, the ETF immediately rallied, gaining nearly 1.4% in the first five minutes of trading. The first recorded trade for the ETF was made at $ 40.99 per share, with the price rising above $ 42 before turning down.

Bitcoin futures contracts in particular, trading on the Chicago Mercantile Exchange (CME), traded higher almost immediately after the ETF was launched, likely due to speculation that the ETF would become a buyer.

At 13:47 UTC, shortly after the ETF went live, the October CME bitcoin futures expiry was trading at $ 63,855, nearly $ 1,000 above the spot bitcoin price on Binance. In the last hour, the futures market has risen 3.3%, while Binance’s spot price has risen by only 1.7%.

At 16:20 UTC, just under three hours after the start of the trading day on Wall Street, the large spread between the spot and futures markets was reduced, with CME futures trading 400+ USD against the spot price on Binance.

At the same time, the BITO ETF itself was trading at $ 40.92 per share, a decrease of about 2.8% from the open house. Bitcoin is trading at $ 62,540 on Binance, while Bitcoin futures on CME is trading at $ 62,940.

However, at 5:04 p.m., BTC was above $ 63,000 and trading at $ 63,113.

What do experts say about the introduction of a Bitcoin ETF?

The launch of a Bitcoin futures ETF has drawn a lot of attention in the past few days, with some analysts suggesting that it adds a premium on Bitcoin futures traded on the CME over the spot price as seen on crypto exchanges, could achieve. As a result, ETFs have sparked renewed interest in so-called Bitcoin base trading, in which arbitrageurs exploit the price difference between the spot Bitcoin market and the futures market.

According to Eric Balchunas, Senior ETF Analyst at Bloomberg, the new ETF that gained so much acclaim in the market today has outperformed this year’s flagship ETF launch, VanEck’s Social Sentiment ETF, code BUZZ.

Shortly afterwards, Balchunas said the ETF had now reached a trading volume of over half a billion US dollars, making it one of the largest ETFs in terms of volume this year.

In a joint comment, Sebastian Markowsky, Chief Strategy Officer of the Bitcoin ATM provider Coinsource, called the ETF “critical for the introduction of Bitcoin” because many financial institutions cannot record Bitcoins directly.

“There is a huge mountain of capital waiting to gain exposure to Bitcoin with these products,” said Markowsky, adding that the importance of this exposure “probably cannot be overstated.”

Simeon Hyman, global investment strategist at ProShares, also commented on the ETF’s launch that he believes the ETF will enable more people to have Bitcoin “reliably and robustly” in their portfolios.

Additionally, the investment strategist also defended the company’s decision to back ETFs with futures contracts instead of “physical” bitcoins, saying there is “massive volume” in the CME futures market and it is “not a second choice” to support him with the future.

The Bitcoin futures-backed ETF is both “a great and convenient way” to invest in Bitcoin, Hyman said, adding that it is “a turning point in the broader Bitcoin ecosystem.”

Meanwhile, chief investment officer Scott Minerd of financial services firm Guggenheim Partners said he welcomed the ETF, especially because it gives financial institutions easier access to Bitcoin.

“You have to be in something as tradable as an ETF,” Minerd used as the main argument why an ETF is necessary. He added that holding bitcoins directly is not an alternative for many institutional players, both from a regulatory perspective and because “if you just keep bitcoins in your wallet, they can be hacked”.

In addition, the investment manager, who has become famous in the Bitcoin world with his high Bitcoin price target of 400,000 to 600,000 US dollars, reiterated his conviction that “money is something that society creates”.

“If you want to be crypto for the long term, now may not be a bad time,” concluded the asset manager.

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