Today is a historical day, at least for Bitcoin or the whole crypto world. We are witnessing the debut of the ProShares Bitcoin Strategy ETF - BITO - the first SEC-approved Bitcoin futures product to trade on a major American exchange. While it is certainly not the first Bitcoin ETF in the world, it is the first one in the US and its symbolic significance is huge!
As we all know, Bitcoin has a very short life yet, only about 12 years since its birth. Since its very first day born into the world, its fate has always been put on the downside. Even till now when it has a market cap as high as one trillion dollars, its legitimacy is still very much questioned and there is always a strong belief that Bitcoin will fall apart and disappear any day. After all, it has been announced dead over 300 times since its birth and there is no lack of gurus who claim Bitcoin is a poison or a fake money that cannot survive long. More damaging force is coming from some major countries that have tried to kill Bitcoin. We all know what has happened in China where Bitcoin has been totally banned now. As such, there has always been a great fear that Bitcoin may also face the same fate in the US, banned by the US government some day. If that happens, while in reality that won't kill Bitcoin at all, the psychological impact would be beyond imagination if the largest financial market will not allow Bitcoin to flow. But this fear has been officially killed today!! This is a milestone moment that U.S. investors have hungrily been waiting for. There's been a push for the Securities and Exchange Commission (SEC) to approve such a fund for years. And now we have seen it. Or in other words, banning Bitcoin by the US government is out of question by now!!💪💪
That's certainly great news for Bitcoin and cryptos in general. Fortunately the US government is not so stupid as banning Bitcoin would be the stupidest thing a government can make. Last week, Cambridge University released data showing that as of July – when China's bitcoin crackdown was unfolding – the U.S. accounted for 35.4% of the global bitcoin hash rate… a 428% increase from September 2020. That means China has given up a huge financial market, estimated worth over $10 Trillion in the long run. It is truly an insane act of shooting their own foot.😩
The bullish tone has pushed Bitcoin challenging its all time highs as I'm writing. Although it is hard to expect a sustainable new all time high at the first attempt, I'm interested to see how this will play out. Speaking of the new ETF, it is called the ProShares Bitcoin Strategy ETF (NYSE: BITO). Be aware this is not an ETF tracking the real Bitcoin prices but it is a future-based ETF. Due to the nature of futures with contango, future-based ETFs tend to lose money over time. See what has happened to the oil (left USO) and natural gas (right UNG) ETFs. Both have lost over 90% of their value over time (the red lines).
So be careful to buy BITO as a long term investment. You may be disappointed over time due to its long term value atriction.
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