SEC reportedly knocks back Valkyrie’s leveraged Bitcoin ETF

October 28, 2021 Coin Telegraph

Bears

The SEC does not appear to have the appetite for more exotic Bitcoin futures products.

Reports are emerging that the U.S. Securities and Exchange Commission has rejected one, or possibly two, recent Bitcoin exchange-traded fund applications signaling that the regulator is not quite ready for more exotic futures products just yet.

Just a day or so after Valkyrie filed for a leveraged Bitcoin futures ETF and Direxion applied for an inverse fund for bears, the SEC appears to have vetoed them both.

On Oct. 28, Bloomberg’s senior ETF analyst Eric Balchunas referred to a Dow Jones alert indicating the Valkyrie leveraged fund had been shelved by the SEC. He added that the move was likely also to apply to the inverse fund application.

Looks like the SEC not having it w the levered (and likely inverse) Bitcoin futures ETFs. Can’t hurt to try tho. Had they gone through likely billion dollar trading vehicles in a few yrs. via Dow Jones pic.twitter.com/MspMRf3hL9
— Eric Balchunas (@EricBalchunas) October 27, 2021

On Oct. 26, ETF issuer Direxion filed for a Bitcoin Strategy Bear ETF that would enable speculators to buy futures that short the price of BTC. On the same day, Valkyrie filed for a leveraged BTC futures ETF that would have offered 1.25x exposure to the asset.

The Direxion product invested purely in futures, however, the Valkyrie one would have held futures, swaps, options, and forwards. Another Dow Jones alert reported the SEC only seems interested in direct futures products at the moment, funds that buy contracts from the Chicago Mercantile Exchange (CME).

The regulator does not seem keen to approve any products that invest in the asset itself or anything other than CME futures contracts at this stage. Balchunas confirmed:

“Would be interesting (and poss) if they let the Inverse one go through. That one was limited to futures. Valkyrie’s was a bit of a departure from that language.”

ETF Store President, Nate Geraci, reported that two more ETFs had been applied for on Oct. 27 from AXS Investments. The SEC filings are for a regular Bitcoin Strategy ETF similar to the two already approved, and another shorting or inverse fund.

Another Dow Jones report states that Grayscale is confident that the SEC will be ready to approve a spot Bitcoin ETF by July 2022.

On Oct. 19, Grayscale filed an application with the SEC to convert its popular Bitcoin Trust (GBTC) into a spot fund that is backed by the asset itself as opposed to futures contracts.

Geraci, commented on the current lack of regulation over spot crypto markets, “So crypto markets/exchanges will be regulated by then? Seems ambitious.”

In related news, VanEck is making final preparations for the launch of its Bitcoin Strategy ETF which will trade under the ticker XBTF. On Wednesday, Balchunas said there was a “good chance” it could start trading on Friday, Oct. 29, but possibly Thursday.

New Bitcoin ETFs filed: One for bears, the other with ‘leverage for ants’

October 27, 2021 Coin Telegraph

Bears

ETF issuers are getting creative with two new filings for inverse and leveraged funds.

Exchange-traded fund issuer Direxion has filed for a product that would enable speculators to buy contracts that short the price of Bitcoin.

In a filing made to the U.S. Securities and Exchange Commission on Oct. 26, the company unveiled the Direxion Bitcoin Strategy Bear ETF. Like other futures products, it will not invest directly in BTC, but will instead maintain managed short exposure position contracts issued by the Chicago Mercantile Exchange (CME).

Direxion stated that the fund may invest in other BTC futures, money market funds, deposit accounts, or short-term debt instruments. However, the firm did issue a dire warning that the value of the product could go to zero.

“The value of an investment in the Fund could decline significantly and without warning, including to zero. You should be prepared to lose your entire investment.”

Bloomberg senior ETF analyst Eric Balchunas described it as an inverse Bitcoin ETF. He reported that the company already has a '-1x BTC futures ETF' in Canada called BITI, adding “while it’s gotten pretty wrecked, when it works it WORKS (as Bitcoin tends to sells off fast).”

INVERSE BITCOIN ETF: Direxion just filed for a -1x Bitcoin Futures ETF, which will seek to be short front month bitcoin futures, basically the $XIV of $BITO.. This comes mere hours after the first levered bitcoin ETF was filed. pic.twitter.com/bN2m7pIZw5
— Eric Balchunas (@EricBalchunas) October 26, 2021

Direxion originally filed for a Bitcoin ETF in 2018 but it ended up in the queue with all of the others that the SEC had delayed at the time.

Bloomberg reported that on Oct. 26, Valkyrie filed for a leveraged BTC futures ETF that will offer 1.25x exposure to the asset. If approved, it will trade under the ticker BTFX and can hold futures, swaps, options, and forwards.

Not everyone was impressed with the minimal leverage available, with user VandelayBTC referring to a Zoolander meme to throw shade.

1.25x? What is this? Leverage for ants?
— Vandelay ₿TC Industries (@VandelayBTC) October 26, 2021

Commenting on the creative new futures products being proposed at the moment, ETF Store President Nate Geraci said that there will be more of these types of filings and ETH futures before a spot product wins approval.

“SEC has blessed CME Bitcoin futures from a regulatory perspective. If these leveraged & inverse products exist in other blessed markets, then no reason not to exist here.”

As if in response to the bearish product proposal, Bitcoin prices have retreated 3.6% over the past 24 hours to trade at $60,787 at the time of writing.

Valkyrie’s Bitcoin Strategy ETF Debut Listing Drops Over 4% — Proshares ETF Slides 3.5%

October 22, 2021 Bitcoin.com

Valkyrie’s Bitcoin Futures ETF Is Now Live on Nasdaq

October 22, 2021 The Crypto Briefing

Valkyrie Bitcoin futures-linked ETF launches on Nasdaq, with share prices dropping 3% in first hour

October 22, 2021 Coin Telegraph

Bitcoin

While the price of Bitcoin rose above $63,000 during the launch of ProShares' Bitcoin Strategy ETF, it dipped under the price level today to hit the $61,000s.

The second Bitcoin (BTC) futures-linked exchange-traded fund in the United States began trading on the Nasdaq, opening at a price of $25.52 per share.

According to the Nasdaq, digital asset manager Valkyrie’s Bitcoin Strategy ETF, the second exchange-traded fund allowing U.S. investors direct exposure to cryptocurrency futures, opened at a price of $25.52 per share of BTF before dropping 3.3% to reach $24.66 at the time of publication. The exchange-traded fund is aimed at tracking the value of BTC futures listed on the Chicago Mercantile Exchange, or CME.

"This Bitcoin Strategy ETF is a major leap forward for this asset class," said Valkyrie CEO Leah Wald. "It enables investors to participate in the digital asset markets through a regulated, transparent product that trades on a trusted, reliable exchange and can be bought and sold as easily as any other investment currently available."

The crypto fund on a major stock exchange is the second to launch this week following ProShares’ Bitcoin Strategy ETF opening for trading on the New York Stock Exchange on Oct. 19. In less than a week, the fund has reached more than $1 billion in assets under management in addition to approaching the limit on the number of futures contracts allowed under the CME.

The Securities and Exchange Commission first accepted the registration request for Valkyrie’s ETF on Oct. 15 shortly after doing the same for shares of ProShares’. The regulatory body still has several crypto ETF applications under consideration, and has only approved ones with exposure linked to BTC futures.

According to data from Cointelegraph Markets Pro, the price of Bitcoin rose above $63,000 for the first time in months following shares of ProShares’ ETF opening for trading on Oct. 19, later reaching an all-time high price approaching $67,000. Today, the price dipped more than 3% following markets opening, dropping from $63,449 to as low as $61,437.

Too popular: Bitcoin futures ETF in danger of hitting upper limit for contracts

October 22, 2021 Coin Telegraph

Bitcoin

Unprecedented demand for the ProShares futures fund could result in longer contracts that may stray from Bitcoin prices.

The ProShares Bitcoin Strategy ETF is on track to reach a limit on the number of futures contracts it’s allowed after quickly becoming a little too popular.

After just a couple of days of trading, the ProShares ETF has reached 1,900 contracts sold for October and there is 2,000 front-month limit imposed by the Chicago Mercantile Exchange.

There are already 1,400 contracts for November and there is an overall maximum limit of 5,000 open contracts according to Bloomberg. One solution could be to offer longer contracts, but that would carry the danger of too much distancing from BTC prices.

President of the advisory firm the ETF Store, Nate Geraci, commented that the fund could start to diverge from market prices, adding:

“The ETF is forced to obtain Bitcoin price exposure at higher and higher prices as it goes further out on the futures curve.”

The launch of competing products such as the Valkyrie Bitcoin Strategy ETF which will commence trading today, and the VanEck ETF which is expected to trade on Monday, Oct. 25, may dilute the demand for the ProShares fund.

As reported by Cointelegraph, the ProShares ETF became the first-ever fund to hit $1 billion in assets under management in just two days. It beat an 18-year-old record previously held by a gold-based fund that did it in three.

Bloomberg senior ETF analyst, Eric Balchunas, said that the momentum will still be hard to stop at this point.

“The unprecedented early volume in BITO makes it like a snowball rolling downhill, as liquidity and assets begets more liquidity and assets.”

Balchunas also thinks that the success of Bitcoin futures products may speed up the approval of a spot-based Bitcoin ETF.

“Both the success, general functioning of ETFs and the clear issue of potential capacity of futures may get the SEC to reconsider or work out a path for spot.”

As reported by Cointelegraph on Oct. 18, Grayscale has already anticipated this and is preparing to convert its popular Bitcoin Trust into a physically-backed product based on spot markets.

Sources Say Valkyrie Bitcoin Strategy ETF Set to Launch on Nasdaq This Week

October 21, 2021 Bitcoin.com

Bitcoin futures ETF hits $1B AUM in a record-breaking two days

October 21, 2021 Coin Telegraph

Bitcoin

The ProShares Bitcoin ETF has beaten an 18-year-old record for the fastest fund to a billion-dollar AUM.

Since the ProShares Bitcoin Strategy ETF started trading this week, it has become the fastest fund ever to reach $1 billion in assets under management (AUM).

The highly anticipated launch of the first Bitcoin futures exchange-traded fund in the United States, BITO, has resulted in a number of milestone achievements.

Bloomberg senior ETF analyst Eric Balchunas reported that the fund was the quickest ever to reach a ten-figure AUM after just two days of trading. BITO easily surpassed the previous record holder, a gold-based fund with the ticker GLD, which took three days to hit the billion-dollar mark in 2004.

He commented that this was “poetically apropos,” presumably in reference to Bitcoin’s store of value properties and comparison to digital gold.

RECORD BREAKER: $BITO assets up to $1.1b after today, making it the fastest ETF to get to $1b (2 days) breaking $GLD’s 18yr old record (3 days), which is poetically apropos. https://t.co/yGXyfwaogD
— Eric Balchunas (@EricBalchunas) October 20, 2021

Balchunas exclaimed “I’ve never seen anything like this. I bet ProShares is even shocked,” while retweeting a post by Bloomberg Intelligence research analyst, James Seyffart, who updated the original chart.

Balchunas commented that there may not be any contracts left to buy if this volume continues, referring to a post by ETFStore President Nate Geraci stating that nearly 45% of BITO exposure is now in November futures contracts.

“If $BITO keeps up this pace of inflows it won’t have any futures left to buy by the end of the month due to pos [position] limits.”

The ProShares fund also broke the record for the highest-ever first day of organic volume which hit $1 billion on Oct. 19 when it launched. More than 24 million shares were traded during its debut day and since the ETF went live, it has now traded more than $2 billion in volume.

Balchunas has predicted that the next Bitcoin futures fund launch will be on Friday. This is likely to be the Valkyrie Bitcoin Strategy ETF which is changing its ticker back to BTF in preparation. In crypto circles, the former ticker BTFD also referred to "buy the f*cking dip," which may not have gone down too well with the SEC.

I had said this was launching tmrw it’s actually going to be on Friday. sorry about that. https://t.co/fqaGwjgscO
— Eric Balchunas (@EricBalchunas) October 20, 2021

The momentum has driven Bitcoin prices to a new all-time high of $67,276 on Oct. 20 according to CoinGecko. At the time of writing, the asset had retreated slightly to change hands around the $65,230 mark.

Analysts predict Valkyrie will launch Bitcoin Futures ETF this week

October 19, 2021 Coin Telegraph

bitcoin etf

Bloomberg ETF analysts are predicting Valkyrie’s futures-based Bitcoin ETF will commence trading this week.

Commentators are predicting that a second futures-based Bitcoin exchange-traded fund (ETF) will go live by the end of the week following the launch of ProShares’ Bitcoin Strategy ETF later today.

On Oct. 19, Bloomberg’s analyst Eric Balchunas predicted that Valkyrie’s Bitcoin (BTC) futures-based ETF is “likely” to launch in the coming days after being certified for listing on the Nasdaq exchange last week.

If true, the milestone would make Valkyrie’s fund only the second Bitcoin ETF to launch in the United States, with ProShares’ futures-based ETF slated to begin trading on the New York Stock Exchange under the ticker $BITO on Oct. 19.

Fellow Bloomberg analyst James Seyffart had initially predicted that Valkyrie's Bitcoin Strategy ETF ($BTF) would go live on the same day as ProShares’ product. However, Balchunas tweeted earlier today that Varlkyrie’s fund will “likely” launch on Oct. 20 or Oct. 21, adding that ProShares will have the “market to itself” for the time being.

Update: Valkyrie not going live tomorrow. Likely looking to launch Wed or Thu tho, but we'll see. Anyway, $BITO will have market to itself tomorrow. https://t.co/G2Ucit6yxM
— Eric Balchunas (@EricBalchunas) October 18, 2021

Balchunas also noted that Valkyrie had updated its ticker from BTFD to BTF in its application.

Invesco bows out of race to launch futures-based Bitcoin ETF

Despite the bullish sentiment surrounding the U.S. Securities and Exchange Commission (SEC) approving the United States’ first Bitcoin ETF, Invesco announced it had withdrawn its application for a futures-based ETF on Oct. 18.

While onlookers had predicted Invesco’s futures ETF would receive a greenlight from the SEC this week, the firm revealed on Oct. 18 that it had withdrawn its application, adding its intentions to work toward launching a spot Bitcoin ETF in partnership with crypto broker-dealer Galaxy Digital. Invesco stated:

“We have determined not to pursue the launch of a Bitcoin futures ETF in the immediate near-term; however we will continue to work in partnership with Galaxy Digital to offer investors a full shelf of products with exposure to this transformative asset class, including pursuing a physically-backed, digital asset ETF.”

However, during an Oct. 19 episode of Anthony Pompliano’s “Best Business Show,” Seyffart and Balchunas argued that the approval of a spot BTC-backed ETF is unlikely to happen anytime soon.

Balchunas asserted that SEC chairman Gary Gensler is much more “comfortable” with Bitcoin futures-based ETFs as they offer greater consumer protections than spot-backed funds.

New SEC Filings Give the Impression US Regulators Approved a Bitcoin Futures ETF

October 16, 2021 Bitcoin.com

Valkyrie

Invesco bows out of race to launch futures-based Bitcoin ETF

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