Bitcoin hits six-month high as first bitcoin futures-based exchangefund

Bitcoin hit a six-month high and was within striking distance of its all-time high on Tuesday as traders bet the listing of the first bitcoin futures-based U.S. exchange fund would herald investment flows into cryptocurrencies.

The NYSE Arca Bitcoin Strategy ETF is listed on the ProShares Bitcoin Strategy BTC, owned by Intercontinental Exchange Inc. on Tuesday under the ticker BITO. That followed the end of a 75 day period at which U.S. Securities and Exchange Commission could object to the listing

The new ProShares ETF closed at $40.88 and was last at $41.64. ETFs are securities that track an asset and can be purchased or sold on a stock exchange (in case of an overwriting) Analysts said the ETF would likely simplify access to cryptocurrencies for retail investors.

It can attract flows from investors who prefer the ease of an ETF over perceived risk of an exchange, said Martha Reyes, head of research at crypto exchange Bequant.

Bitcoin, the world's largest cryptocurrency, touched $63,337. 54 after the listing, its highest since mid-April and nearly surpassed its record of $64,895, where 54 were issued. Known for its volatility throughout its 13 year life, bitcoin has risen by approximately 40 per cent in this month on hopes that the introduction of Bitcoin ETFs - several are in works - will see billions of dollars managed by pension funds and other large investors flow into the sector.

Still, other analysts have cautioned the fund will not invest directly in bitcoin - but in Chicago futures - and so any immediate implications for flows may be limited.

The speculators have been wagering that its launch is a positive signal for spot prices anyway. Bitcoin futures rose 1.2 per cent, last trading at $62,380.

This could lead to more constant buying pressure on CME, causing open interest to rise. This will attract more cash-flow opportunities, which will lead to stronger buying pressure in the spot market, crypto analysts said at Arcane Research in a note.

Stakeholder Crypto ETFs have launched this year in Canada and Europe amid a growing interest in digital assets. VanEck and Valkyrie are among funds managers with U.S. -listed ETF products, although Invesco dropped its plans for a futures-based ETF on Monday.

The Nasdaq also approved the listing of the Valkyrie Blockchain strategy ETF and Grayscale plans to convert its Grayscale Bitcoin Trust into a spot Bitcoin ETF, the company confirmed.