ProShares Bitcoin Strategy ETF (NYSE: BITO) began trading in the United States market yesterday, overnight Aussie time.
The futures-based Bitcoin (CRYPTO: BTC) exchange traded fund (ETF) is the first to launch in US, in an event eagerly anticipated by crypto enthusiasts.
And investor response was phenomenal.
What happened with BITO on the first day?
The BITO share price closed its first day of trading up 4.8% to US$41.94. And it's up another 0.2% in after hours trading at time of writing.
According to data from Bloomberg, more than 24 million shares of BITO changed hands yesterday. That represents a turnover of some US$1 billion (AU$1.3 billion). In a single day.
That makes BITO the second-most heavily traded fund on its debut day on record.
But this could just be the tip of the iceberg.
Tom Lee, co-founder of Fundstrat Global Advisors, believes the ETF could attract US$50 billion or more of inflows in its first year.
And if a futures-based ETF isn't enough, there will soon be more ways for investors to speculate on the Bitcoin price.
Derivatives.
Yep, according to Bloomberg "options on BITO will begin trading on the NYSE Arca Options and NYSE American Options exchanges on Wednesday".
That's tonight for you and me.
How has the Bitcoin price reacted?
Bitcoin is within a whisker of its all-time highs of US$64,863, set on 14 April this year.
The Bitcoin price is up 3.5% over the past 24 hours and up 14% over the last week to US$64,217, leaving it just 1% shy of retaking its record.
The run higher has seen Bitcoin's total market valuation once more exceed US$1.2 trillion, according to data from CoinMarketCap.
A range of factors have helped drive the Bitcoin price back up from its lows of US$29,807 on 20 July. But many analysts have pointed to the global hype surrounding the pending US Bitcoin ETFs, of which BITO just became the first, as fuelling demand for the digital token.
The ETF opens the door for more institutional investor participation, and many retail investors are more comfortable buying shares than working with digital wallets or crypto exchanges.
A word on BITO from ProShares and the market experts
Commenting on the long awaited launch, Simeon Hyman, global investment strategist at ProShares, said on Bloomberg TV:
We are really excited to bring BITO, the first Bitcoin-linked ETF, to investors as an important opportunity for them conveniently to invest in Bitcoin in their regular brokerage account. This is going to allow many people who have been waiting for an easy way to do this and a robust way to do this to now be involved and have it in their portfolios.
Addressing the success of the ETF during its first day of trade, Stephane Ouellette, CEO of cryptocurrency and derivatives provider FRNT Financial said:
From our conversations with market participants, I think it's related to the growing belief as the trading day goes on that this is going to be considered a successful launch. Given the amount of avenues retail investors already have to participate in BTC, clearly the US-based ETFs are nonetheless satisfying some kind of latent, even if niche, demand.
Sam Bankman-Fried, CEO of crypto exchange FTX added, "It's an incredibly bullish week – there's been really positive sentiment around the ETF in particular."
While some analysts are again eyeing a potential US$100,000 Bitcoin price, others are cautioning things could well move the other way.
And if the Bitcoin price does retrace, the BITO price will go down with it.
Invest with care.
