21 Oct - 2 min read
Bitcoin has climbed to a new all-time high of more than US$65,000 (over RM270,000) yesterday, buoyed by the successful launch of the first Bitcoin-linked exchange traded fund (ETF) on Tuesday (19 October 2021).
The spike – which reached over 7% in the day – came as investors celebrated the debut of the ProShares Bitcoin Strategy ETF (BITO) on the New York Stock Exchange (NYSE) in the previous session. At the peak of last night’s excitement, Bitcoin’s value even briefly soared as high as US$66,928.67 (about RM278,322.00) before dipping back slightly, currently hovering at the US$64,000 mark.
BITO – as an ETF – does not invest directly in Bitcoin, and therefore, does not reflect the current price of Bitcoin itself (also known as spot price). Instead, it trades in futures contracts that are tied to the cryptocurrency, which means that it is based on the speculative future price of Bitcoin (futures price).
While the new product may sound somewhat risky to some investors, a key perk to the Bitcoin ETF is that it will provide a new way for conventional investors to gain exposure to Bitcoin, namely through brokerage accounts. Specifically, it could encourage those who possess a brokerage account “but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider…or are concerned that these providers may be unregulated and subject to security risks” to begin investing in cryptocurrency.
Since its launch, BITO has seen a jump of 4.8% in price, to close at US$41.94. In fact, BITO raked in more than US$1 billion worth of asset under management in just two days, making it the fastest ETF to reach the US$1 billion mark.
In April 2021, Bitcoin rose to a peak of over US$65,000, before eventually suffering a massive plunge in the 2021 Crypto Crash in May and the cryptocurrency token touched lows of US$28,000 in the months after. The new all-time high marks a spectacular turnaround of Bitcoin prices and highlights the level of volatility that crypto investors experience.
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