First Bitcoin ETF Trades at a Discount, but Bitcoin Price Soars
The first Bitcoin ETF, the ProShares Bitcoin Strategy ETF (BITO), traded at a discount to the spot price of Bitcoin on its first day of trading. However, the price of Bitcoin itself soared, reaching a new all-time high of over $69,000.
The launch of the BITO ETF is seen as a major milestone for the Bitcoin industry, as it provides investors with a regulated way to invest in Bitcoin. The ETF is also expected to bring new institutional investors into the Bitcoin market.
The Grayscale Bitcoin Trust (GBTC), which has been trading for several years, also saw high volume on the day of the BITO ETF launch. GBTC is a closed-end trust that invests in Bitcoin. It currently trades at a premium to the spot price of Bitcoin.
Notable: $BITO traded $1.7b last week, 2nd biggest week since its wild WEEK ONE. $GBTC did $800m. That's $2.5b (top 1% among ETFs) into two less desirable methods (vs spot) for exposure = while we think spot ETFs unlikely to set records on DAY ONE, clearly there's an audience pic.twitter.com/6bFYtE0UoR— Eric Balchunas (@EricBalchunas) October 28, 2023
Some analysts believe that the high volume in GBTC on the day of the BITO ETF launch shows that there is an audience for a spot Bitcoin ETF. A spot Bitcoin ETF would track the spot price of Bitcoin, unlike the BITO ETF, which tracks Bitcoin futures contracts.
The SEC is expected to rule on a spot Bitcoin ETF soon. If the SEC approves a spot Bitcoin ETF, it would be a major boost for the Bitcoin industry.
Ripple CEO Brad Garlinghouse criticized former SEC Chair Jay Clayton for his views on regulation. Clayton had filed a lawsuit against Ripple that had little chance of success. The SEC recently moved to dismiss the charges against Ripple executives.
Garlinghouse said that Clayton’s views on regulation were “harmful” and that he had “set the SEC back by years.” He also said that the SEC’s lawsuit against Ripple was “a waste of taxpayer money.”
The SEC has not yet commented on Garlinghouse’s remarks.
Implications for the Future:
The impressive trading volume and the decreasing discount of GBTC indicate a growing acceptance and interest in Bitcoin investment products. This development strengthens the case for the introduction of a spot Bitcoin ETF, which could further open the doors for institutional investors to participate in the cryptocurrency market. As more investors seek exposure to Bitcoin through regulated investment vehicles, it is expected to have a positive impact on market liquidity and overall price stability.