First leveraged Bitcoin futures ETF opens for trading on CBOE

The Volatility Shares 2x Bitcoin Strategy ETF (BITX) opened for trading on the Chicago Board Options Exchange (CBOE) on June 27.

Chang Kim, COO at Volatility Shares, said:

“There’s a big audience that’s already out there for leveraged-type products, and to sort of marry that with the intrinsic interest that there is in all things crypto — that’s why we feel that there’s a pretty good audience out there for this.”

Several Bitcoin futures ETFs are available in the U.S. market, including the ProShares Bitcoin Strategy ETF (BITO) and the VanEck Bitcoin Strategy ETF (XBTF). However, BITX is the first to offer leveraged trading.

Leverage enables traders to open positions worth more than the money deposited – giving greater exposure to the underlying asset’s price movements. The difference between the value of the trade and the trader’s deposit (margin) is loaned by the platform provider.

The Commodities Futures Trading Commission cautioned investors about management fees and other expenses on Bitcoin futures ETF – adding that disclosure and price risks are also factors to be wary about.

Flood of spot Bitcoin ETF applications

BlackRock filed for a spot Bitcoin ETF on June 15, triggering a wave of other asset managers following suit, including WisdomTree and Invesco.

The Securities Exchange Commission has not approved a spot Bitcoin ETF application, despite around 30 applications submitted since 2013. The agency has denied applications over concerns about the “opaque” spot market and manipulative price practices.

Spot ETFs differ from futures by pricing based on the spot market, usually a mean average spot price from several exchanges. While futures ETFs rely on pricing based on the futures price. In addition, the latter is typically settled in cash, whereas a spot Bitcoin ETF would allow settlement in BTC.

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