The ProShares Bitcoin ETF is here! How Will It Impact BTC Spot Prices?

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Oct 20, 2021

Why Crypto Markets Crash Over Weekends []

The day cryptocurrency enthusiasts have long-awaited is finally here. The first bitcoin exchange-traded fund (ETF) in the US is expected to launch on October 19, marking a historic moment for crypto adoption.

The ProShares Bitcoin Strategy ETF will start trading at the opening bell of the New York Stock Exchange on Tuesday. The pioneering bitcoin ETF will list under the ticker BITO, offering investors exposure to BTC futures contracts.

The ETF comes at a time when institutional investment in crypto is at a new record high. According to an October 18 report by CoinShares, the total of digital assets held by fund managers has crossed $72B for the first time in history.

Martha Reyes, head of research at Bequant exchange, argues that an ETF could herald more investment inflows into the crypto space.

Paolo Ardoino, CTO of Bitfinex exchange, hails the historic ETF in the US as a turning point for bitcoin. He expects the product to simplify access to crypto for retail users, fostering widespread adoption.

BTC Price Shoots to Six-Month High

The advent of the ProShares Bitcoin ETF has sparked excitement in the market. Consequently, the event is prompting speculators to bet on rising BTC prices. The king coin jumped over 2% on Tuesday to hit highs above $62K for the first time in six months.

The impact of the ETF on sentiment is already being felt by the crypto market. Evidently, BTC trades within striking distance of its record highs. The coin has gained over 40% this month as crypto proponents anticipated the approval of BTC ETFs by US regulators. 

The approval of the much-anticipated ETF could boost interest in the king coin, likely prompting pension funds and other big-money investors to channel capital into cryptocurrencies.  

Could the ETF Propel BTC to New ATH?

The correlation between futures contracts and spot prices isn’t always clear-cut. Essentially, investors will use the Proshares product to wager on Chicago-traded futures rather than bitcoin itself. That would likely limit the impact of the ETF on spot prices. One crypto trader even argues that the approval of the US-listed product will not affect BTC prices.

However, analysts at Arcane Research predict that the futures-based fund could boost bitcoin’s open interest on CME, pushing spot prices higher.  

“This could lead to more constant buying pressure on CME, causing the open interest to rise. This will attract more cash and carry opportunities, leading to buying pressure in the spot market,” the analysts wrote.

Market participants will now be watching to see whether the ETF could generate enough momentum to drive BTC prices toward $100K, as predicted by some bulls.

More Bitcoin ETFs could Launch Soon

The decision by the SEC not to oppose US-listed exchange-traded funds has opened the door for the launch of the pioneering ProShares ETF.

Several other fund managers are currently pursuing similar products as interest in digital assets surges. Some investment firms that may soon list their ETFs in the US include Valkyrie and VanEck.

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