Bitcoin-futures ETF sparks fresh interest in local crypto market

The launch of ProShares is expected to bring a new class of investors into cryptocurrencies and increase trading volumes in Malaysia 

by NUR HANANI AZMAN / pic by BLOOMBERG

THE first bitcoin-focused exchange-traded fund (ETF) will boost the broader crypto market and is expected to bring a new class of investors into cryptocurrencies and increase trading volumes in Malaysia. 

Luno Malaysia country manager Aaron Tang said the anticipation leading up to and the eventual launch of a US-based bitcoin futures ETF ProShares has helped drive remarkable gains for bitcoin in October 2021. 

He said this is a milestone that some believe could spark a fresh wave of institutional investors and usher in a new era for cryptocurrency. 

“Of course, it is still early days, but we are excited about the bitcoin ETF’s potential benefits to the crypto ecosystem. 

“It is still early to tell what the sentiment will look like for bitcoin ETFs in Malaysia. Nevertheless, with crypto proponents’ warm reception towards bitcoin ETFs globally, we believe similar sentiment in Malaysia will grow,” he told The Malaysian Reserve (TMR). 

The launch of the ProShares Bitcoin Strategy ETF is officially a hit with investors. The ETF, which gains exposure to bitcoin via futures contracts rather than owning it outright, saw more than 24 million shares trade hands in its trading debut last Tuesday. 

Echoing the same sentiment, Tokenize Technology (M) Sdn Bhd founder and CEO Hong Qi Yu saw this as a bullish indicator and there will be a growing interest in retail investment into digital assets such as bitcoin. 

“This might also increase interest for institutions and mainly institutional investors in Malaysia and even growing interest to roll out the Malaysia version of the bitcoin ETF. 

“I am super bullish on the industry’s outlook. In 2003 when the gold ETF was approved, the price rallied 500% since then and bitcoin might have the same benchmarking,” he told TMR. 

Hong said there are few factors increasing interest among investors — mainly price movement. 

“Media publicity to create awareness and access to the market (like government stance to regulate it or ban it) also plays a big role. 

“Tokenize being one of the four Digital Asset Exchange that is licensed by Security Commission Malaysia creates a safe and trusted, easily accessible channel for retail investors in Malaysia to be able to access digital assets like bitcoin seamlessly,” he added. 

Meanwhile, abrdn Islamic Malaysia Sdn Bhd CEO Gerald Ambrose opined that the US Securities and Exchange Commission does appear willing to allow the launch of a futures-linked ETF because they feel they can regulate it, whereas the cryptocurrency exchanges in existence under the blockchain system are not within their control. 

He said this is good news, but the additional price a buyer pays when dealing in such a fund is legal fees, broker fees, stamp duties, transaction levies and exchange fees. 

“In short, many new middlemen who were not there before, so if bitcoin goes up 100%, the fund buyer may only get, say, 70%. 

“Sentiment on bitcoin, ethereum and other cryptocurrencies are extremely volatile but in general should rise in my view because they’ve only just scratched the surface of the full ‘network effect’ of modern media and many believe that paper money/fiat currencies are being debased beyond repair by developed world central banks,” he told TMR.