The BITX being a 2x leveraged ETF can help investors to increase their profit two times faster than they would do without the leverage.
The first leveraged Bitcoin futures exchange-traded fund (ETF) has received approval from the US Securities and Exchange Commission (SEC). The ETF, the Volatility Shares 2x Bitcoin Strategy (BITX), will be launched on the Chicago Board Options Exchange (CBOE) BZX Exchange on Tuesday, June 27th.
ETFs can be traded on exchanges like stocks, and their prices change often within the same day as they are bought and sold. Bitcoin ETFs are of two main types: the Bitcoin futures and the Bitcoin spot price. The approval of futures ETFs will expose investors to Bitcoin without having to invest in the actual asset.
Although many in the crypto industry are pleased with the introduction, some are concerned about the order in which they are being granted. They wonder why a leveraged futures product like BITX is being introduced before a traditional spot ETF.
Nate Geraci, the President of ETF Store, is one of the people who believe the spot ETF should have been prioritized. In expressing his views about the announcement, he made the following comment in a tweet.
When we look back on the bitcoin ETF saga in 5 or 10yrs, this will be one of the most ridiculous aspectsโฆ
A 2x leveraged futures product launching before a straightforward spot ETF.
Wild.
โ Nate Geraci (@NateGeraci) June 23, 2023
The BITX being a 2x leveraged ETF can easily mean investors will increase their profit two times faster than they would have without the leverage. On the other hand, the chances of losing their money in the case of a less favorable market condition are also doubled. Thus, as it offers more profit, it also increases the chances of losses.
In expressing their thoughts about the risks involved in trading leveraged products, the SEC stated that:
โThe Fund presents different risks than other types of funds. The Fund is not suitable for all investors and should be used only by knowledgeable investors who understand the consequences of seeking daily leveraged (2x) investment results, including the impact of compounding on Fund performance.โ
The Approvalย ofย BITXย is Good Newsย forย the Cryptocurrency Industry
ย Withย theย SECโsย variousย lawsuitsย againstย cryptoย companies,ย includingย theย recentย suingย ofย Binanceย andย Coinbase, oneย may concludeย thatย theย SECโsย chairman,ย Garyย Gensler,ย is critical of cryptocurrencies. However, the recent updates may provide other perspectives on how the regulatory body sees cryptocurrencies.
Eric Balchunas, a senior ETF analyst at Bloomberg, expressed his thoughts in a tweet, saying:
โThe 2x bitcoin ETF $BITX has become effective, scheduled to launch Tuesday. I was doubtful it would happen but looks like itโs official. Could this be early sign of SEC lightening up? After $BITO launch I believe they made earlier 2x filers withdraw.โ
The approval can affect how investors perceive the industry, attracting more of them and making the market more volatile. While it may be too early to conclude how the SEC sees cryptocurrencies, this news is a move in the right direction for the crypto industry.
BTC Price Spiked after BITX News Release
The news affected the price of Bitcoin, which spiked to $31,450 shortly after its release on Friday, June 23rd. The figure represents the highest price it has reached in a year. It is also a 5% increase from its closing price of $29,890 the day before. The sudden rise in price signals investorsโ confidence in crypto and that the market received the news well.
Temitope is a writer with more than four years of experience writing across various niches. He has a special interest in the fintech and blockchain spaces and enjoy writing articles in those areas. He holds bachelor’s and master’s degrees in linguistics. When not writing, he trades forex and plays video games.ย
Subscribe to our telegram channel.
Join
