Since the first Bitcoin (BTC) ETF was rejected in 2013, the cryptocurrency community has been waiting for approval from the United States Securities and Exchange Commission (SEC).
However, after 8 years of waiting, the successful approval of the first Bitcoin ETF in the US market may be the very catalyst for a fall in the product and, consequently, the price of Bitcoin.
Based on an exclusive analysis of Passfolio shared with Cointelegraph, Perhaps due to the long wait, the ProShares Bitcoin Strategy ETF (BITO) was the fastest ETF to hit $ 1 billion in assets under management (AUM), having reached the milestone in just 2 days. And not only that, but it has registered the second largest debut volume in history, surpassing one billion dollars.
“Bitcoin started the week holding the price of $ 60,000, but also without reaching new highs. Importantly, every time the spot price of Bitcoin approached $ 60,000, there were large purchases of Bitcoin futures in the Chicago. Mercantile Exchange (CME), with orders for a total of USD 840 million “, highlights the company.
Passfolio also highlights that BITO has recorded a loss of -3.2% since it began trading, compared to -2.7% for Bitcoin in the same period.
“This difference is normal, since the ETF handles futures contracts, not real Bitcoin, and must bear the costs of opening contracts,” he says.
Success can represent short-term “failure”
However, this next week, according to Passfolio, Investors should have a point of attention regarding the ETF, as the renewal of the futures contracts will occur. Bitcoin futures contracts expire on the last Friday of each month, and BITO intends to roll over its positions before expiration.
So far, BITO has managed to decrease exposure to contracts due in October (BTCV1) and increase exposure to contracts due in November (BTCX1). However, as the Bitcoin futures market is still new, it may run into liquidity problems.
Passfolio also notes that BITO has requested an exemption from the 5,000 contract position limit imposed by CME and this could pose a big problem in the short term for the ETF.
“If the exemption is denied, the fund may have to look for assets other than futures contracts, such as buying stocks that have a high correlation with the price of Bitcoin. Of course, this is not ideal and could hurt the profitability of BITO, especially in the short term “, highlights the company’s analyst.
As for Bitcoin, Passfolio highlights that sentiment on BTC remains positive, with various signals supporting forecasts ranging from $ 90,000 to $ 168,000 in the coming months.
“The strong movement of buying futures may also affect spot prices, raising expectations of new highs soon,” he concludes.