Bitcoin hit a six-month high and was within striking distance of its all-time peak on Tuesday as traders bet an anticipated listing of a futures-based U.S exchange-traded fund could herald investment flows into cryptocurrencies. Bitcoin, the world's biggest cryptocurrency, rose as much as 1.5 per cent during the Asia session to $62,991, its highest since mid-April and near its record of $64,895. It last traded flat.
Known throughout its 13-year life for its volatility, bitcoin has risen by some 40 per cent this month on hopes the advent of bitcoin exchange-traded funds (ETFs) - of which several are in the works - will see billions of dollars managed by pension funds and other large investors flow into the sector. ETFs are securities that track an asset and can be bought or sold on a stock exchange. ProShares' Bitcoin Strategy ETF is expected to list on Tuesday under the ticker BITO, provided the U.S regulator, the Securities and Exchange Commission, does not object.
Analysts said the ETF would also likely simplify access to cryptocurrencies for retail investors."It can attract flows from investors who prefer the ease of an ETF over the perceived risk of an exchange," said Martha Reyes, head of research at crypto exchange Bequant.
Still, other analysts have cautioned the fund will not invest directly in bitcoin - rather in Chicago-traded futures - and so therefore any immediate implications for flows may be limited.
But speculators have been wagering its launch is a positive signal for spot prices anyway. Bitcoin futures rose 1.2 per cent, last trading at $62,380. "This could lead to more constant buying pressure on CME, causing the open interest to rise. This will attract more cash and carry opportunities, leading to buying pressure in the spot market," cryptocurrency analysts at Arcane Research said in a note. Crypto ETFs have launched this year in Canada and Europe amid surging interest in digital assets.
VanEck and Valkyrie are among fund managers pursuing U.S.-listed ETF products, although Invesco on Monday dropped its plans for a futures-based ETF. The Nasdaq on Friday approved the listing of the Valkyrie Bitcoin Strategy ETF and Grayscale, the world's largest digital currency manager, is planning to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF, CNBC reported. ProShares ETF is set to begin trading on Tuesday after a 75-day period during which the SEC could object to its listing elapsed on Monday.