My Take on the Launch of the First-Ever Bitcoin Futures ETF

My Take on the Launch of the First-Ever Bitcoin Futures ETF

Posted On October 19, 2021 3:15 pm

The first Bitcoin futures and Exchange Traded Funds (ETF) launched trading on established U.S. exchanges.  The event has been long-awaited, the anticipation was palpable as BTC ran up 10% last week to a new high above $60K, and the first day of trading was a success. 

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There were various commentaries and interviews, including those from SEC head Gary Gensler; a digital currency proponent 

According to Bloomberg ProShares Bitcoin Strategy ETF, (BITO) saw strong investor demand during its trading debut — a watershed moment for the crypto industry. 

The fund rose by 5.4% to $42.15, and by midday, it had traded 12 million shares worth roughly $480 million.  Who cares that it’s currently down on the day?  The crypto maniacs now have a bigger and better sandbox to play in. 

Granted, there are a plethora of exchanges and ways to trade not just BTC but all the crazy coins; from the newly-minted IPO of Coinbase (COIN) — which has aspirations of moving from a middle/man transaction model — to become a full-service financial firm.  There are also grab bags of crypto exchanges, mostly Asia-based, that sprung up during BTC 2017 flare to the $17,000 level. 

I even had a Bitfinance account, which had lost 90%, leaving about $300 stranded somewhere along the chain.  When BTC crossed above $60 earlier, it was with around $1,400; not life-changing but would be nice to have.  But, there was a hurdle;  “BitFinance was no longer able to send money to U.S. citizens.”   There were obstacles to be navigated (ie lie re: place of residency or citizenship) and there would be a window to retrieve the money. 

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I thought my kids, 14 & 16, would be perfect for the task, given their reasonable computer literacy.  They would keep whatever amount of money retrieved.  They are either lazier than I thought, or my ex-wife is wealthier than I knew. 

Anyway, the reason I diverged from the above rambling anecdote is to drive home the point that today’s move of listing BTC products wrapped in futures and ETF wrapper on national exchanges is a major step forward for the crypto asset class and a huge win for retail investors.  

It’s really part of the evolution that’s broken down the wall, in terms of flattening the playing field for information access and ease (low cost) execution which has been underway for stock and options trading for the past 25 years. 

I did some research, book reading, and actual trading in cryptos in 2017.  However, multiple exchanges, lack of transparency (disjointed pricing), and honestly, a bit of mocking over the 1,000 of coins/NFTs and outright scams left me nonplussed. 

With futures and ETFs  (and I’m assuming more coins are being listed; ETH would be next up),  this is going to be a viable market and one I hope to participate in in the near future. 

Yes, there will be shenanigans and certain rules that seem to favor the exchange and market makers.  But, on the whole, this is just another step of leveling the playing field.  It should be the dawning of the golden age for astute traders ready to embrace the new crypto class. 

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.