Bitcoin futures linked to index funds (ETFs) have become a reality. Proshares became the first cryptocurrency ETF on Monday following approval by the Securities and Exchange Commission (SEC).
Futures are financial derivative contracts that obligate parties to transact in an asset at a predetermined date and price. The buyer —or seller— must purchase the underlying asset at the set price, regardless of the current market price on the expiration date.
In the first 20 minutes after the ETF came to market, the fund raised just over $280 million from the sale of the shares, placing the ETF among the 15 highest-grossing initial public offerings on the exchange on launch day. The total volume of money the ETF moved in the market during its first day was $993 million.
On the same day the Proshares ETF was approved, Barry Silbert, Grayscale’s legal representative, filed a motion with the SEC to convert Grayscale’s Bitcoin Trust, which is currently valued at $41.4 billion, to a Bitcoin ETF that can trade in the financial spot markets.
According to Bloomberg Intelligence there are still seven pending SEC petitions to approve the launch of other Bitcoin ETF’s. There are two more of these ETF’s could begin trading on the U.S. stock market in October. The SEC is due to approve VanEck’s and Valkirie’s ETF’s applications in the next two weeks.
The Valkyrie Bitcoin Strategy ETF index fund is expected to be approved for trading next Friday, according to Bloomberg analyst Eric Balchunas, and would begin listing on the Chicago Mercantile Exchange. Valkyrie beat out VanEck in the race to launch a Bitcoin ETF; approval of VanEck‘s ETF will have to wait until October 25 for its launch.
Before Valkyrie’s and VanEck’s ETF’s, financial Invesco planned to launch its own futures index fund, Invesco ended up withdrawing its application on Monday via a statement reporting that:
We have decided not to pursue the launch of a Bitcoin futures ETF in the immediate short term; however, we will continue to work in partnership with Galaxy Digital to offer investors a full shelf of products with exposure to this transformative asset class, including the pursuit of a physically-backed digital asset ETF
Despite Invesco’s withdrawal, there are still 5 other Bitcoin index funds to be approved by the SEC and due to the expectation of Bitcoin ETF approval, the price of Bitcoin has risen 40% during the month of October.