Bitcoin Surges to New Record Above $66,000 After Landmark Exchange-traded Fund (ETF) Debut

Bitcoin, the world’s most valuable cryptocurrency, notched a fresh all-time high Wednesday as investors cheered the successful launch of the first U.S. bitcoin futures exchange-traded fund (ETF). Bitcoin climbed around 4% to $66,474.20 by noon ET, topping a previous record of $64,899 set in mid-April.

The pop has been fueled by renewed hopes that regulators in the United States would not crackdown on cryptocurrencies, support from big investors such as George Soros, and the launch of the first exchange-traded fund tied to bitcoin futures.

The ProShares Bitcoin Strategy ETF, which began trading on Tuesday, rose 3% Wednesday morning. Some investors are now predicting even bigger gains for bitcoin, despite continued criticism of the cryptocurrency by JPMorgan Chase (JPM) CEO Jamie Dimon, who recently called bitcoin “worthless.”

BITO’s debut was the second-largest ever for an ETF, reflecting massive interest in the crypto sector. However, incoming buyers — especially first-time crypto owners — should be forewarned: the new Bitcoin ETF(s) won’t trade exactly like the market digital coin that tends to fluctuate wildly. 

The Securities and Exchange Commission (SEC) approved the new ETF as futures-based, meaning they’re derivative, based on the underlying BTC price. That makes them more complex and expensive to own than holding Bitcoin outright.

But Grayscale Investments and the New York Stock Exchange is moving to convert the world’s biggest Bitcoin fund into a spot-based ETF, capitalizing on the market’s embrace of the new fund and a regulatory environment that appears to be shifting in favor of cryptocurrency.

Investors have been clamoring for a fund based on spot prices that would better serve retail investors. However, the SEC chose to approve BITO first because, as futures-based products they are governed by a 1940s law act that gives investors a higher degree of protection. 

Other Bitcoin ETF contenders — including Grayscale, which offers (GBTC) — remain optimistic that the futures-based ETF will pave the way for a spot product. But near-term, Balchunas remains bearish given that SEC Chair Gary Gensler appears less interested in the spot ETF for Bitcoin because it falls under a 1933 securities provision that grants less investor protection.