Bitcoin futures ETF risks hitting the upper limit on contracts

The ProShares Bitcoin Strategy ETF is well on its way to hitting its limit on the number of futures contracts allowed after it has quickly become so popular.

In just a few trading days, the ProShares ETF sold 1,900 contracts for October and has 2,000 previous month limits imposed by the Chicago Mercantile Exchange.

There were 1,400 contracts in November and the maximum total limit was 5,000 open contracts, according to Bloomberg. One solution could be to offer longer contracts, but that carries the risk of deviating too much from the BTC price.

Commenting that the fund may begin to deviate from market prices, the president of the advisory firm ETF Store, Nate Geraci, added:

“The ETF is forced to win bitcoin arbitrage at ever higher prices as it continues to move along the futures curve.”

The introduction of competing products like the Valkyrie Bitcoin Strategy ETF, which begins trading today, and the VanEck ETF, which is scheduled to start trading on Monday October 25, could dilute demand for the ProShares fund.

As reported by Cointelegraph, the ProShares ETF is the first fund to reach $ 1 billion in assets under management in just two days. It beat the previous 18-year-old record held by a gold-based fund that did it three times.

Bloomberg’s chief ETF analyst Eric Balchunas believes the rally will be difficult to stop at this point.

“The unprecedented initial volume in BITO makes it roll downhill like a snowball, because liquidity and assets lead to more liquidity and assets.”

Related: VanEck Bitcoin Strategy ETF is expected to hit the market next week when the crypto price hits the ATHs

Balchunas too think that the success of Bitcoin futures products could accelerate the approval of a spot Bitcoin ETF.

“Both the success, the overall performance of the ETF and the obvious problem with the profitability of futures could lead the SEC to rethink or find a way to the spot.”

As Cointelegraph reported on Oct. 18, Grayscale predicted this and is preparing to convert its popular Bitcoin Trust into a physically secured product based on the spot market.