Against the background of the rise: The start of trading this week in the US of the first ETF to focus on futures contracts on Bitcoin. This, after the US Securities and Exchange Commission allowed the move for the first time this week after years of requests
After several days of gains, Bitcoin set a new record today (Wednesday) — reaching a value of $ 66,975. Last April it reached a previous record value of $ 64,889, but within a few weeks it fell by more than 50% to less than $ 30,000 and has since experienced particularly sharp rises and falls. The currency is now trading at a volatility of around $ 66,800.
As in previous cases, this time too, breaking the record brings with it waves of gains in most of the other major currencies in the market: Etherium rises by about 7% and trades around $ 4,050; XRP rises by more than 5% and stands at about $ 1.14 and Cardano jumps by about 4% and is now around $ 2.2. The dogcoin, which is a particularly favorite currency for billionaire Elon Musk, also jumped by about 4% and is now trading at around $ 0.25.
The main reason attributed to the current rise in Bitcoin value is that the US Securities and Exchange Commission (SEC) first allowed the issuance of futures (ETFs) of futures contracts, the first of which, ProShares Bitcoin Strategy ETF, began trading yesterday under the symbol BITO and ended the day Its first trade increased by about 5%.
According to the Bloomberg news agency, the fund managed to trade at a total value of $ 1 billion, making it the second most traded fund in history on its first day on the stock exchange.
What does this actually mean? A mutual fund is a traded mutual fund that holds any financial assets, for the purpose of Bitcoin, and allows the general public to hold hundreds of percent assets through the stock exchange and enjoy or lose an increase or decrease in value. In fact, Bitcoin imitation funds already exist in many countries around the world, but this will be the first time such a fund has been set up in the United States.
However, as mentioned, the imitation fund that began trading is not just a Bitcoin imitation fund, but a basket fund of futures contracts on Bitcoin. That is, the person who buys the same ETF is actually buying a contract whose price reflects the future price of Bitcoin and not the asset itself.
Ultimately, the device is not designed to “gamble” on a rise or fall in the price of bitcoin more than regular bitcoin trading, but to make exposure to the popular virtual currency accessible to existing stock traders, without having to physically hold virtual currencies. In fact, since this is a futures contract, the fund itself does not hold the currency itself at any stage.
This is also one of the reasons why the US Securities and Exchange Commission did allow these funds to enter the market, as they do not require the actual holding of virtual currencies — a market that is not monitored in the US — but only allow exposure to it. To traders and allow investment in virtual currencies without actually allowing it directly.
One of the criticisms of the move is that in an attempt to mitigate the dangers that exist in the market, including “price manipulation”, the entry of those funds as another factor in the process can actually affect the crypto market and the price of bitcoin.
At the same time, there can be all sorts of dangers and costs involved in investing in a futures fund that focuses on futures contracts, one of the main ones being the “rollover” costs that result from having to sell the expiring contract and buy the next contract if you want to hold the financial instrument for long. In addition, any investment in an ETF, future or ordinary, will of course involve the payment of management fees to the fund’s managers.
As with any record break, we are expected to see a significant increase in trading volumes and an increase in shopping, which will continue to generate more demand and they will generate an increase in the price and use of Bitcoin. Also, the adoption of Bitcoin by giant companies like Verifone, MasterCard, Visa and PayPal in their platforms, further strengthens the status of Bitcoin and digital currencies as the means of payment of the global economic future.
I estimate that demand will increase and therefore the value of digital currencies, especially Bitcoin, will continue to rise in the near future. However, it should be understood that investing in the digital currency market involves some risk, so we recommend reading and delving at least at a basic level before rushing into investing, especially if it is a currency that is not one of the leading currencies. It is also very important to research the body from which you are buying and make sure that it is a reliable and supervised body