Bitcoin Bedazzles Part II
Tony Sycamore October 19, 2021 2:06 AM
After an eight-year wait, the first Bitcoin Futures ETF will list tonight on the New York Stock Exchange.
In the lead-up to the listing, excitement has been building. More so after the U.S Securities and Exchange commission effectively greenlighted the listing in a tweet last week that said
“Before investing in a fund that holds bitcoin futures contracts, make sure that you carefully weigh the potential risks and benefits,”
The ProShares Bitcoin ETF will track the cash-settled Bitcoin futures listed on the Chicago Mercantile Exchange, which tracks underlying movements in Bitcoin.
Hence the ETF is essentially a derivate of a derivative. Investors won’t own the underlying asset (Bitcoin); however, they will obtain exposure to movement in the underlying asset.
The ticker of the ETF is BITO. According to ProShares CEO Michael Sapir
“BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider ... or are concerned that these providers may be unregulated and subject to security risks.”
All valid reasons and surely another step towards more widespread digital asset adoption, but perhaps not as big as some think..
Bitcoin, like all cryptocurrencies, trades 24 hours a day, 7 days a week, 365 days a year. The Bitcoin ETF will only trade for the ~7 hours a day the exchange is open and will not trade on weekends.
This means that if big moves in either direction occur outside of the NYSE trading hours, then investors will not be able to capitalize or stop out of a position as the case may be. Somewhat restrictive in the volatile world of cryptocurrencies.
After all but reaching the target outlined in an article two weeks ago titled Bitcoin Bedazzles “a retest of year-to-date highs near $65,000”, the easy money that followed the rally from below $40,000 has now been taken off the table.
Additionally, there is the risk of a “buy the rumour sell the fact” type reaction like the one that followed El Salvador adopting Bitcoin as legal tender in early September.
While we remain medium-term bullish Bitcoin, we are now neutral in the short term and looking to re-enter longs, ideally on a corrective pullback. The same goes for Ethereum.
Source Tradingview. The figures stated areas of October 19th, 2021. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.