The first ever exchange-traded fund (ETF), backed by bitcoin futures, brought in $570 million on its first day. This is a sign that investors are still hungry for the cryptocurrency.
The fund’s sponsor ProShares announced the amount of assets via an emailed notice sent by a representative. ProShares Bitcoin Strategy Fund launched Tuesday on New York Stock Exchange under ticker BITO. It had $20 million in seed capital as of Tuesday morning.
ProShares also reported that the fund saw $1 billion in trading volume its first day. According to ProShares, this made it the second most traded new ETF ever, according to Bloomberg.
At the close of stock market trading, the price of the fund rose to $41.94, up 4.9% from its initial $40 net asset value.
Dave Nadig is chief investment officer and director for research at ETF Trends. He stated that a lot of Tuesday’s trading volume was likely to have come from retail investors since there were not many large block trades the size that large institutional traders are used to.
In a telephone interview, Nadig stated that ‘This is likely going to be what everyone expected’, which is it’s an accessibility vehicle for certain market players. “There are many active participants in the markets that don’t want the crypto bridge alone.
The launch of the new ETF came at a time when bitcoin’s price surged Tuesday, reaching a six-month high and climbing towards an all-time high of $65,000 set in April.
At press time, the cryptocurrency was trading at $63,839, an increase of 3.3% in the last 24 hours.
Matt Hougan (chief investment officer at Bitwise Asset Management) stated in emailed remarks that the strong first day showing “suggests that there is a large sum of capital that is still excluded form the crypto market simply due to it being difficult to access.”
Hougan stated that “that will change over the time, and that capital would enter the market,” “That’s a very bullish signal for long-term.”
Chief investment officer at Arca Funds Jeff Dorman wrote Tuesday in a newsletter that this was a long and difficult road for many. It is yet another sign that digital assets are becoming mainstream.
ProShares ETF is the first of its type in the U.S. and offers investors an opportunity to get exposure to bitcoin returns with the ease of purchasing an ETF from a brokerage account.
The U.S Securities and Exchange Commission (SEC approved ETF Friday. Other pending ETF proposals could also be approved by the SEC this week.
ProShares ETF invests in bitcoin futures contracts that are traded on the Chicago-based CME. It is not designed to directly invest in cryptocurrency.
The ETF won’t create any new demand for Bitcoin. Traders might purchase more bitcoin to hedge against futures prices or take advantage price disparities.