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The ProShares Bitcoin Strategy ETF, the first crypto-based fund approved for US markets, started trading Tuesday, Oct. 19 on the NYSE under the symbol BITO.
While it is not the first Bitcoin ETF globally, BITO's launch in the U.S. represents a major milestone in the acceptance of Bitcoin (BTC) as an investable asset.
US-based Bitcoin ETFs also open the door for more US investors to own Bitcoin. Many US brokerages do not offer access to cryptocurrency or to foreign exchanges where other crypto funds might trade, while access to US-traded ETFs is common.
The ProShares ETF is the first crypto-based fund approved by the Securities and Exchange Commission for trading in the US, after a decade of applications from ETF sponsors. Many more appear to be on the way. A second has already launched, a third is expected within days, and many more are awaiting approval or being planned.
Trading opened at $41.94, and shares traded in a range from $37.34 to $43.95 in its first few days on the market, slight underperforming Bitcoin. The target is to match Bitcoin's return.
Here's how bullish investors can get involved with this Bitcoin ETF.
Launched by ETF issuer ProShares and headed by CEO Michael L Sapir, the fund is designed to give investors exposure to the Bitcoin currency.
However, investors don’t actually own Bitcoin directly through the fund. Unlike traditional ETFs that buy and sell underlying assets such as stocks, BITO uses futures contracts to profit from Bitcoin price fluctuations.
In other words, it uses contracts that speculate on the future price of Bitcoin. Depending on how volatile the market is, these prices could differ significantly, which means there are additional risks.
To check out other Bitcoin-related ETFs, check out our cryptocurrency ETF guide.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Founder & CEO at Monochrome Asset Management
For everyday investors, accumulating physical Bitcoin comes with added hurdles of custody and operational risks.
"Bitcoin as a technology is battle-tested, but there is an inherent operator's risk when self-acquiring, holding and managing a bitcoin position even for the most experienced digital native, hence there's a market for those who prefer a safe pair of hands to manage their investment in exchange for a small management fee.
"Investing in a Bitcoin ETF offers investors the benefits of a safe yet low barrier to diversifying their portfolio into the asset class since it's a well understood financial product for most investors."
ProShare's ETF is suited to a number who want to gain exposure to Bitcoin without owning the underlying asset class.
Buying a ProShare's ETF means investors are trading on future contracts.
If the price of the underlying asset goes up long-term the ETF should lead to net gains for investors. If the price of Bitcoin falls, then the value of the ETF should also decline.
Due to the structure of the ETF, an ETF approach might be suitable for retail investors who do not understand the complexities around investing in crypto assets.
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