Bitcoin hit a six-month high and was within striking distance of its all-time peak on Tuesday as traders bet that an anticipated listing of a futures exchange-traded fund could herald investment flows into cryptocurrencies. Bitcoin, the world's biggest cryptocurrency, rose as much as 1.5 per cent during Asia trading to $62,991, the highest since mid April and near its previous record of $64,895. It was traded flat the last time.
Known for its volatility throughout its 13-year life, bitcoin has risen about 40 per cent in the past month to meet hopes that the advent of bitcoin exchange traded funds ETFs - of which several are in the works - will see billions of dollars managed by pension fund and other large investors flow into the sector. ETFs are securities that track an asset and can be sold or bought on a stock exchange. ProShares' Bitcoin strategy ETF is expected to list under the ticker BITO on Tuesday, provided that the U.S regulator, the Securities and Exchange Commission, does not object.
Analysts said the ETF will also likely simplify access to cryptocurrencies for retail investors. It can attract investors who prefer the ease of an ETF over perceived risk of an exchange, said Martha Reyes, head of research at crypto exchange Bequant.
Still, other analysts warn the fund will not invest directly in bitcoin - rather in Chicago-traded futures - and so any immediate implications for flows may be limited.
But speculators have been wagering that the launch of the UK is a positive signal to spot prices anyways. Bitcoin futures rose 1.2 per cent, last trading at $62,380. The open market position could lead to more constant buy pressure on CME, causing the CME to increase. This will attract more cash flow opportunities, leading to acquiring pressure in the spot market, cryptocurrency analysts at Arcane Research said in a note. In Canada and Europe, digital ETFs have been launched this year amid surged interest in crypto asset trading.
VanEck and Valkyrie are among fund managers holding U.S. ETF products, although Invesco dropped its plans on Monday to start a futures-based ETF company. The Nasdaq on Friday approved the listing of the Valkyrie Bitcoin Strategy ETF and Grayscale, the world's largest digital currency manager, is planning to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF, CNBC reported. ProShares ETF is set to be traded on Monday after a 75 day period during which the SEC could object to its listing until they expired on Monday.