Hot demand for Bitcoin ETF, since Wild West on Wall St. hits

The Wall Street opened its doors for the crypto industry this week, when the first stock market-traded Bitcoin fund in the United States attracted more than $ 1 billion in investor funds and drove the price of the largest digital currencies to new highs.

Similar vehicles are already being traded elsewhere, but the introduction of a crypto ETF on the largest stock market in the world is a significant milestone for crypto supporters after eight years of lobbying.

For the first time, mainstream investors can now keep in addition to traditional financial systems such as stocks and bonds, a Bitcoin-bound security in their portfolios.

"This is the fastest ETF that achieves a fortune of $ 1 billion.

The well-received debut of the Bitcoin ETF shows how traditional financial companies fight for part of the digital asset industry. It also underlines the recognition of many financial guards that the sector has grown too big and grows too quickly to shake it off.

Small investors only made up about 12-15 percent of the net runs of the ProShares ETF on the first two trading days, which, according to JPMorgan, indicates considerable interest among the institutes. Another similar vehicle that is sponsored by Valkyrie Funds was launched on Friday, three days after the Proshares product. Analysts expect it to be replicated many times.

other announcements this week, including a blockbuster financing round of the FTX crypto tour, which is supported by a series of blue chip investors, have increased the hype by digital assets.

These signs of increasing interest and an increase in professional dealers who use crypto as the basis for demanding market betting contributed to the first time to drive the Bitcoin price over 66,000 on Wednesday before he went back to around $ 61,000 by Friday. The stocks of Coinbase, the largest listed stock exchange, rose by more than 10 percent in the days before the introduction

However, many analysts say that the introduction of the ProShares ETF is only the beginning of a much longer struggle to convince the Securities and Exchange Commission that a product that offers a direct connection to largely un -regulated cryptoma markets should be traded on the walls of Wall Street.

For the SEC, the decisive factor for the approval of the ProShares ETF was that the vehicles of Futures Contracts, which are traded on the Chicago Mercantile Exchange, a fully regulated trading center, and not directly via digital coins. As a rule, cryptocurrencies are bought and sold through a variety of trading places in a market, which the chairman of the Commission, Gary Gensler, called the "wild west".

"What you have here is a product that is from [The Commodity Futures Trading Commission] for four years and this is wrapped in something within our jurisdiction.. We have the opportunity to integrate it into investor protection," said Gensler in an interview with CNBC.

Interactive Brokers, the retail broker, presented the crypto trade for financial advisors on Monday, but Thomas Peterffy, his chairman, was more careful with regard to the value of the ProShares fund or similar fund for investors.

Peterffy, who helped to bring computers to Wall Street in the 1970s when he started machines to calculate the value of securities and options, said that the only benefit for crypto was a fallback if the money or banking system had problems.

"I think if such problems arise, these ETFs will have an incredible discount on the value of the coins. So I think it has no use. As long as people don't think about it, the price will move with the price of Bitcoin."

other pointed out that an ETF based on futures can detach himself from the asset that he should imitate. Uso, the oil ETF worth $ 2.9 billion, has often removed significantly from the price of US raw oil in the past ten years.

A factor are the "rolling costs"-if the fund manager regularly changes to a new Futures contract when the previous one expires. This could be more expensive if the market expects the Bitcoin price increase in the future. A situation in which the Futures Prize is higher than the Spot Prize could mean that the ETF is below the returns that would be achieved by owning Bitcoin by around 7 percent a year, said Andy Kapyrin, Co-Chief Investment Officer at Regenatlantic, a $ 5 BN registered investment advisory group.

This is more Karyin added to the product for investors who want to keep a position in the long term. "This makes it more of short -term trading athletes than to banishes than in long -term owners," he said. It is "a no-go for consultants" that recommends keeping long-term positions, but admits that it is "a good product for trade".

For this reason, several asset managers are already urging that the SEC gives the green light for the establishment of funds that are linked directly to the crypto prices. Some ETF sponsors have also withdrawn from their own futures-based products.

Invalco said that it would concentrate on receiving approval for an ETF that holds digital tokens. Shortly before Wall Street opened on Tuesday, Digital Asset Manager Grayscale Investments announced plans to its 40 billion

"There is a little euphoria in the industry that we now have an ETF, but it's the first step," said Dave Lavalle, Global Head of ETFs at Grayscale. "Ultimately, the goal is that investors should have the choice between ETFs based on futures and physical bitcoins."

It can be a dream in many years. Brett Harrison, President of the US arm of the crypto derivate exchange FTX, said that the SEC's decision not to be in the way of the Proshares Fund this week is unlikely that this would be the first in a series of regulatory cathedral.

"I think the SEC wants the Spot crypto bonds to fall under a certain regulatory framework before it agrees," he said.

The Sec chairman Gensler has asked the US legislator to issue powers to monitor crypto trading platforms, and he wants the companies to register with the agency.

The SEC is also in the middle of a violent legal debate about whether digital coins should be registered as securities at all. Many leading crypto players question this view.

"It is very unlikely that a direct Bitcoin or another kind of crypto asset fund will be approved in the near future," said Amy Lynch, founder and president of Frontline Compliance, regulatory advice. "At the moment the question is exactly what kind of format of these assets is considered as securities."