The U.S. Securities and Exchange Commission (SEC) approves the first-ever leveraged Bitcoin futures exchange-traded fund (ETF). The decision marks a significant milestone in accepting and regulating cryptocurrencies, opening up new avenues for investors seeking exposure to the volatile yet enticing world of digital assets.
The SEC approves leveraged Bitcoin ETF comes after months of deliberation and scrutiny by regulators. The ETF, designed to provide investors with leveraged exposure to Bitcoin price movements, will allow them to amplify their gains or losses based on the performance of Bitcoin futures contracts.
Next Tuesday, June 27th, marks the official launch date of the Volatility Shares 2x Bitcoin Strategy ETF (BITX) on the Chicago Board Options (CBOE) BZX Exchange.
SEC Approves First Leveraged Bitcoin Futures ETF, BITX Launch Date Set
On Friday, the U.S. Securities and Exchange Commission (SEC) approved the inaugural leveraged Bitcoin futures exchange-traded fund (ETF). The upcoming launch of the Volatility Shares 2x Bitcoin Strategy ETF (BITX) on the Chicago Board Options (CBOE) BZX Exchange is scheduled for next Tuesday, June 27. According to the official SEC filing, BITX aims to achieve investment outcomes that align with twice (2x) the performance of the Chicago Mercantile Exchange (CME) Bitcoin Futures Daily Roll Index.
ETFs, which stand for exchange-traded funds, are investment vehicles that group together various securities, such as stocks and commodities. By purchasing shares of an ETF, investors can obtain exposure to these securities without the need to own them directly. Bitcoin ETFs, specifically, can be categorized into two primary types: Bitcoin futures and Bitcoin spot ETFs.
The Potential Risks and Rewards of Leveraged ETFs
The BITX fund is set to be an ETF with leverage. Leveraged funds employ debt or financial derivatives, such as Bitcoin futures in this instance, to magnify the returns of a benchmark index. While this leverage can result in short-term gains for investors, it also entails the potential for substantial losses.
Although today’s announcement SEC approving leveraged Bitcoin ETF received widespread praise from cryptocurrency enthusiasts in the market, it does raise a few unanswered questions. Nate Geraci, the co-founder of the ETF Institute, took to Twitter to express his thoughts, stating that when reflecting on the Bitcoin ETF journey in 5 or 10 years, the launch of a 2x leveraged futures product before a straightforward spot ETF will be regarded as one of the most absurd aspects. He concluded his tweet with the word “Wild.”
In the meantime, some individuals noted that $BITO, the first Bitcoin futures ETF in the United States, has exhibited lower performance compared to BTC year-to-date. However, it experienced a surge in response to today’s news when paired against the USD. According to Yahoo Finance, the asset recorded a 3.45% increase, reaching $17.57. Nevertheless, this value remains over 50% below its previous peak of $43.32 in 2021.
Optimism Emerges as BITX Approval Hints at Changing Tides for SEC and Crypto
Bitcoin’s upward momentum persists as it reached $31,000 today, reflecting a 3.4% rise. The approval of BITX injects a sense of revitalization into the digital asset industry, particularly following the SEC’s recent lawsuits against two major cryptocurrency exchanges. Gary Gensler, the head of the regulatory agency, has consistently expressed his skepticism toward cryptocurrencies.
Considering BlackRock’s recent application for a Bitcoin ETF, one might wonder if this signals a shift in the SEC’s historically turbulent relationship with crypto. It may be premature to draw definitive conclusions, but the news undoubtedly provides encouragement to investors.
In conclusion, SEC approves leveraged Bitcoin ETF, along with the growing interest from institutions like BlackRock, which offers a glimmer of hope for the future of cryptocurrencies. Despite previous regulatory challenges and the underperformance of certain Bitcoin-related assets, the industry continues to show resilience. The evolving landscape and increasing institutional involvement suggest a gradual shift in sentiment toward digital assets.
Also Read: Binance ordered to cease its crypto services in Belgium.
