Thread by @HenriArslanian

Today is another historic milestone for #Bitcoin and the #crypto ecosystem with the listing of the first Bitcoin #ETF in the US.

What is the importance of this new Bitcoin ETF and what may be it’s impact?

Time for a thread 🧵

Today the Pro Shares Bitcoin Strategy ETF was listed on the NYSE under ticket #BITO

This is a moment the crypto ecosystem has been waiting for many years.

Is it the first Bitcoin ETF?

In the US, yes.

Globally no.

There are already many Bitcoin ETFs in #Canada for example and many other ETNs/ETPs in Europe and elsewhere.

Will this new Bitcoin ETF hold physical Bitcoin? No.

Here the US SEC was not as adventurous as its Canadian counterparts where the Canadian ETFs hold physical Bitcoin for example.

The US listed Bitcoin ETF will hold cash settled Bitcoin futures listed on the @CMEGroup.

These are cash settled (so no physical Bitcoin delivery) and are derivatives (so not spot Bitcoin).

But is it still an important development? Yes

Couple of reasons:

1. Allows American investors to have exposure to Bitcoin via an instrument that is “traditional” and on a regulated exchange, the @NYSE.

2. Many investment advisers previously had restrictions in investing in crypto for their clients for various reasons including:

- spot Bitcoin being outside the investment instruments they were allowed to trade;

- spot Bitcoin being traded on unregulated exchanges;

- spot Bitcoin could not be included as part of the clients’401k;

- spot Bitcoin’s tax position was unclear;

- etc.

Now most of these excuses go away with such a Bitcoin ETF.

But there are also downsides with such a futures ETF including fees.

This ETF has an expense ration of ~ 0.95% and there are a lot of costs in running a futures based ETF like the cost of rolling over the futures at expiry as an example.

This is one of the reasons why many investors who can may still prefer to hold spot Bitcoin directly.

But this is still a very important development for our #crypto ecosystem.

What I am now watching for the coming months?

- inflows - the Bitcoin ETF had a very strong start on its first morning and will watch whether the inflows and volumes will continue.

- Competitors - many other firms have applied for Bitcoin ETFs so will be interesting to watch when they launch and the interest they get including @vaneck_us @InvescoUS @ValkyrieFunds @GalaxyDigitalHQ

- Impact on price of Bitcoin - this ETF buys cash settled futures but this still may have an impact on the spot price due to normal arbitrage/ price discovery mechanisms

- Global impact - now that SEC has approved, will other regulators and exchanges accelerate their approvals?

- Physical Bitcoin ETFs - a bit longer term but will be interesting to watch what happens to these Bitcoin futures ETF if and when physical Bitcoin ETFs are approved.

Definitely a development to follow!

Hope this was an useful update.

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