Countdown to the first ETF launched by Bitcoin – What investors should watch out for


“Tomorrow is great”…

The phrase “Tomorrow is great” comes from Plutarch and belongs to the Theban general Archias, a friend of the Spartans, who, when at a banquet someone handed him a letter containing the information that he was in danger from the Democrats and Pelopidas, he – on the feast and in his joy, on the intoxication of his power and authority- he neglected to open it.
So, instead of reading the letter, he put it aside commenting “ἐς αὔριον τα σπουδαῖα”.
And he died…
In the case of Bitcoin, however, and the new ETF-approved ones, the great ones, indeed, are tomorrow, Tuesday, October 19 … since, as the ProShares provider reported,The first Bitcoin ETF will be traded tomorrow, closing a multi-year cycle of tough trading and waiting.
Its launch will mark another milestone in a remarkable year for the cryptocurrency market.
In particular, according to the investment company, ProShares Bitcoin Strategy ETF will trade with the symbol “BITO” on the New York Stock Exchange.
Also, according to what has become known, it will concern futures contracts and not the spot purchase.
ProShares stated that BITO will be bought and sold as a stock and no crypto wallet is required.
“We believe that many investors have been looking forward to the launch of a bitcoin-linked ETF after years of effort,” said Michael Sapir, CEO of ProShares.
As he told the “New York Times”, his company will be the first to release such a product on the market.
A day later, on Wednesday, October 20, the Invesco Bitcoin Strategy ETF will be on the air , unless the regulator rules it out.
The approvals could open the gates to a wave of similar products and increase the price of the cryptocurrency, which, according to the Coinbase exchange, at the time of writing these lines exceeded$ 62,000 per currency and was just 2,000 of the all-time high of April 2021.


Doubts and Concerns

Of course, while many analysts believe that bitcoin futures are more suitable for private investors than trading in the underlying spot market, are unlikely to yield the same returns.
The bitcoin futures market usually, though not always, trades with a moderate uptrend, known as the contango – a situation in which the price of a commodity futures is higher on far-term contracts than the current one. (spot), in which case the ETF will probably write losses.
The increased price (premium) of a contract far from the spot is usually due to the cost of carry, which mainly includes storage costs and the security of the goods.
Contango usually occurs when the price of a commodity is expected to increase over time.
Matt Hougan, chief investment officer of Bitwise Invest, which has applied for the bitcoin ETF, estimated the cost of this return at 5% to 10% per annum.
Dave Abner, Gemini’s global head of business development, said: “While bitcoin ETFs are said to offer protection to investors, this approach could, unfortunately, create another set of lower returns.”

Volatility soars

The price of bitcoin has more than doubled since the beginning of the year, although the trend has been volatile as the market faces calls for a strict regulatory framework, repressive measures in China and energy concerns and the environmental footprint, among others.
“Bitcoin will probably test its highs in the midst of the ETF debut” but we will not be surprised to see some profits reach these levels, as traders may try to … sell in the news “, comments Pankaj Balani , CEO of Delta Exchange.
“Volatility in bitcoin will be high, regardless of how the ETF decision develops.”
The “players” in the cryptocurrency market are waiting for the approval of the first American bitcoin ETF, which will cause an influx of money from institutional players who can not invest in digital currencies at the moment.
Rising inflation concerns have also fueled the mood for bitcoin, which remains in a limited supply, in contrast to the ample money printed by central banks in recent years, in a bid to boost economies.
However, some analysts have noted that, following the recent rally, investors may sell bitcoin … at the news of the forthcoming ETF approval.


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