The first-ever U.S. Bitcoin-linked ETF will make its debut on the NYSE on Oct. 19 under the ticker symbol "BITO." The ETF from ProShares, officially known as the ProShares Bitcoin Strategy ETF, will track the Bitcoin futures market. This has been a significant regulatory feat for the crypto industry as a whole. The nod comes after a lot of resistance from regulatory bodies.
It's seen as an endorsement of cryptos by the SEC and it's a big deal for investors who are on the fence regarding investing in cryptos. However, being a new product, many people want to know BITO ETF's price prediction and whether it's a buy.
After the approval for BITO, the floodgates for similar products have opened. In fact, as many as three other such ETFs plan to launch this month. A second futures-based ETF could come as soon as this week. In the last four years, at least 10 asset managers have sought approval to launch spot Bitcoin ETFs but they were all rejected by the SEC.
ProShares BITO ETF
The ProShares fund will invest in Bitcoin directly and will provide exposure to Bitcoin futures contracts on the Chicago Mercantile Exchange. The price and performance of Bitcoin futures is expected to differ from the current spot price of Bitcoin. The annual fee of the ProShares ETF is 0.95 percent, which is rather high compared to most regular ETFs. This is mostly because it's a futures ETF.
BITO ETF price prediction
The predictions for BITO ETF are mixed. Fundstrat thinks that BITO could deliver higher first-year inflows than what the Invesco QQQ Trust Series 1 Fund ETF was able to attract back in 2002. Fundstrat thinks that this ETF should enable vastly more individuals to allocate to crypto. Fundstrat sees more than $50 billion inflows for BITO in its first year.
In contrast, MarketWatch emphasized the concerns of registered investment advisers (RIAs). According to their feedback, the firms are skeptical about a futures-based Bitcoin ETF. People are also concerned about the complexity of a futures-based product compared to trading in spot crypto.
While market participants' opinions regarding the future of the new ETF might vary, most of them agree that this is a huge regulatory win for the crypto industry. The ETF should open new avenues in crypto trading.
Should I buy the BITO ETF?
Whether or not you should go for the BITO ETF depends on your investing style and experience. Most experienced crypto investors would find it much more straightforward and easier to buy a physical asset. Another choice for investors could be to gain exposure through trusts that invest in cryptos like the Grayscale Bitcoin Trust and Bitwise.
However, if you're new to crypto trading and don’t want to go through the process of buying cryptos directly, BITO could be a good option for you. Also, if you're concerned about the regulation and security risks around cryptos, you will find this ETF an attractive alternative.
Another indirect way to gain exposure to Bitcoin is to invest in shares of companies that hold Bitcoin like MicroStrategy, Square, and Tesla.