The U.S. Securities and Exchange Commission (SEC) has given the green light for the first leveraged Bitcoin futures exchange-traded fund (ETF), Volatility Shares 2x Bitcoin Strategy ETF (BITX). Set to launch on the Chicago Board Options (CBOE) BZX Exchange on June 27th, BITX aims for investment results that correspond to twice the return of the CME Bitcoin Futures Daily Roll Index, according to the SEC filing.
ETFs work by bundling securities, such as stocks and commodities, allowing investors to gain exposure to these securities without directly owning them. The approval of BITX introduces a leveraged ETF, utilizing debt or financial derivatives, in this case, Bitcoin futures, to amplify the returns of a benchmark index. While this leverage can result in short-term gains for investors, it can also lead to substantial losses.
The news of the SEC’s approval has been largely well-received by cryptocurrency enthusiasts. However, some skepticism and questions remain. Nate Geraci, co-founder of the ETF Institute, opined on Twitter, highlighting the absurdity of a 2x leveraged futures product launching before a straightforward spot ETF in the coming years.
Others have noted that the U.S.’s first Bitcoin futures ETF, BITO, has underperformed BTC year-to-date, though it did experience a 3.45% gain on the day, reaching $17.57, according to Yahoo Finance. However, this value still represents a decline when compared to its all-time high of $43.32 in 2021. In contrast, Bitcoin’s value has continued to rally, touching $31,000 recently, with a 3.4% gain.
This approval comes on the heels of the SEC’s legal action against two of the largest crypto exchanges just a few weeks ago. Gary Gensler, the head of the regulatory agency, has been a vocal critic of cryptocurrencies in the past. With BlackRock submitting a Bitcoin ETF application earlier this week, some are speculating whether this marks a potential change in the SEC’s rocky relationship with the digital asset industry.
While it might be premature to draw definitive conclusions, the approval of BITX undoubtedly injects some optimism into the world of cryptocurrency. This development serves as an encouraging sign for the sector, even amidst some lingering doubts and concerns. The growing interest of major financial institutions in crypto ETFs and an increasingly favorable regulatory environment may pave the way for a broader acceptance of digital assets in the investment world.
Source: Decrypt
