Investors put $1 billion into bitcoin-ETF in two days. What's next

Assets managed by the first U.S. exchange-traded fund based on bitcoin futures exceeded $1 billion. Will institutional players continue to invest in Bitcoin Strategy ETF and how will it affect the value of the cryptocurrency?

In two days of trading, assets managed by ProShares’ Bitcoin Strategy ETF (ticker BITO) exceeded $1 billion. The fund broke the record for the speed of growth to $1 billion, which was held for 18 years. Until now, the leadership belonged to the “gold” exchange-traded fund (ticker GLD) – it managed to reach $1 billion in three days in 2004.

Bitcoin Strategy ETF is the first U.S. exchange-traded fund based on Chicago Mercantile Exchange (CME Group) bitcoin futures and approved by the Securities and Exchange Commission (SEC). Bitcoin Strategy ETF began trading on October 19 on the New York Stock Exchange (NYSE). On October 21, it became known that the SEC approved two more bitcoin futures exchange-traded funds from VanEck and Valkyrie Investments.

On October 20, the price of bitcoin renewed its all-time high above $67,000. As of 13:40 Moscow time on October 21, the asset is trading at $65,900. Its capitalization is $1.22 trillion, according to CoinGecko. During the day, the cryptocurrency gained 3%.

Analysts at investment bank JPMorgan believe that the reason for the new bitcoin historical high is not the launch of the first bitcoin-ETF in the U.S., but the rise in inflation. The bank says that the Bitcoin Strategy ETF is unlikely to attract much money to the first cryptocurrency.

RBC-Crypto experts predicted whether cryptocurrency-based exchange-traded funds will grow in popularity in the future and how this may affect the digital asset industry.

Institutional influx

Bitcoin-ETF will definitely be in demand from investors and will increase the number of institutionalists in the cryptocurrency industry, says Victor Pershikov, lead analyst at 8848 Invest. According to him, thanks to the bitcoin futures exchange fund, investors got a regulated asset related to cryptocurrency, which can be accessed without any additional conditions directly from the trading terminal.

“In the next year, the number of both ETFs and regulated crypto products will increase, which will allow the digital assets market to be recapitalized by 2-3 times, to the level of $7-8 trillion”, the analyst predicted.

The popularity of exchange-traded funds based on crypto-assets among investors will continue to grow, according to Yuri Mazur, head of Broker’s data analysis department. In his opinion, reports about the winding down of stimulus measures in the U.S. may slow the rate of investments in bitcoin-ETFs, but this will affect all financial instruments, not just crypto-assets and related products.

What will happen to the crypto market

The SEC’s approval of several more applications to launch bitcoin futures ETFs was expected by the cryptocurrency community. This will be another trigger for market growth, says Binance Eastern Europe director Gleb Kostarev. The record-setting Bitcoin Strategy ETF from ProShares in its first two days of trading supported bitcoin’s uptrend, causing it to make a new all-time high.

“Investors are in no hurry to fix profits, demand for bitcoin is high enough and will only grow, and those who would prefer to fix profits now will be in the absolute minority”, Kostarev believes.

Given the increase in the number of new market participants through new crypto products, the price of bitcoin will continue to rise against the growth of capitalization, according to Pershikov. According to his prediction, investors will continue to actively buy digital assets in the next couple of months, as the launch of the first U.S. bitcoin-ETF is more significant than the start of bitcoin futures trading on the Chicago Mercantile Exchange in 2017.

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