Bitcoin pushes toward record before debut of futures-based ETF

NEW YORK • Bitcoin continued its climb toward all-time highs, bolstered by optimism over the upcoming launch of the first bitcoin futures exchange-traded fund (ETF) in the US by asset manager ProShares. 

The largest cryptocurrency rose as much as 2.6% in Asian trading yesterday and was hovering near US$62,600 (RM261,131) as of 12:03pm in Hong Kong. It’s more than doubled this year in volatile trading. The April record is just under US$64,870. 

ProShares plans to start the fund on the New York Stock Exchange yesterday, its CEO Michael Sapir said in an interview. The move is the latest sign of how cryptocurrency-related investments are becoming more mainstream. 

“ETFs mean that this year bitcoin interest could see several billions of dollars come under management which should keep the entire space buzzing,” Edward Moya, senior market analyst at Oanda Corp, wrote in a note. 

The prospect of increased interest in bitcoin from institutional and retail investors is bolstering the token, whose 2021 climb dwarfs the returns from traditional assets like stocks, bonds and gold. That’s a marked change from mid-year, when worries about its energy usage and a harsh crypto crack-down in China sent prices tumbling below US$30,000. 

Other coins are also up so far this week, including the second-largest token Ether. The Bloomberg Galaxy Crypto Index is around the highest levels since May. 

Crypto-linked stocks rallied on Monday, 

including exchange firm Coinbase Global Inc, miner Riot Blockchain Inc and Riot’s UK-based peer Argo Blockchain Plc. In Asia yesterday, South Korea’s Woori Technology Investment Co advanced. 

The technical setup for bitcoin in its latest rally is a concern for Rick Bensignor, the president of Bensignor Investment Strategies, who wrote in a note that being so close to highs might make him “think twice about buying bitcoin now”. 

Noelle Acheson, head of market insights at Genesis Global Trading Inc, cautioned on likely demand for a futures-based bitcoin ETF. 

“It’s another big step in the convergence between traditional and crypto markets,” she said. “But I do think that there will be per- haps not quite as much monetary demand for this product as the market seems to be signalling.” 

Genesis is affiliated with Grayscale Investments LLC, which reiterated on Monday that it will seek to convert its bitcoin trust to an ETF. 

Others are more upbeat — the futures-based bitcoin ETF could attract more than US$50 billion in inflows in its first year given the hype around it, according to noted bitcoin bull Tom Lee, co-founder of Fundstrat Global Advisors. 

“Bitcoin is in a strong position as it challenges the last resistance at US$64,000 above which a breakout will target US$100,000,” said Rich Ross, technical strategist at Evercore ISI. “The fourth quarter offers fertile ground for the most speculative.” — Bloomberg