First Bitcoin futures exchange-traded fund launches

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On Tuesday, 19 October 2021, the first American Bitcoin futures exchange-traded fund is launched, a milestone for the cryptocurrency industry. ETF ProShares will provide exposure to Bitcoin futures contracts-agreements to buy or sell an asset later for an agreed price rather than bitcoin itself. However, although there is a great demand for this new investment instrument, financial advisors are calling for caution before adding it to portfolios due to the very high volatility of the Bitcoin (BTC).

On 19 October 2021, at 6:49 am CET, BTC traded on the Coinbase digital currency market at a mutual exchange rate of US$ 62,450.11 per BTC with the current daily strengthening of BTC by +1.64% against the USD. Less than two weeks ago on Wednesday, 6 October at about 5:53 am CET it was trading at US$ 51,621.00 per BTC. With this current exchange rate, the most widespread and most tradable BTC is constantly exceeding its exchange maximums, but it is considerable volatile. It is this purely adrenaline-fueled way of investing that attracts more and more so-called dynamic investors who are willing to take a very significant investment risk. “The ETF presents a disruption to what is available in the marketplace today,” said Karan Sood, CEO and managing director of Cboe Vest, a financial advisory platform in McLean, Virginia. “That’s what investors are excited about,” Mr. Sood added.

Bitcoin is an internet open-source P2P payment network and also the cryptocurrency used in this network. Bitcoin’s main uniqueness is its full decentralization; it is designed so that no one, including the author or other individuals, groups or governments, can influence the currency, falsify, confiscate accounts, control cash flows or cause inflation. There is no central point in the network, and no one can make decisions. The final amount of bitcoins is known in advance and the release of bitcoins into circulation is defined in the network source code. There are minimal or no cost payments. The network has been operating since 2009 and it was created by a group of people known as Satoshi Nakamoto. According to cryptocurrency analysts Bitcoin is the only medium of exchange that can offset central banks printing money.

A special database that stores an ever-increasing number of data – called a blockchain – serves as bitcoin’s ledger. The online database is protected both against unauthorized outside interference and from the users themselves. The final amount of bitcoins is known in advance and their release into circulation is defined in its source code. A unique feature of bitcoin is its complete decentralization. It is designed so that no one, not even its author or other individuals, groups or governments, can influence, counterfeit, confiscate accounts, control cash flows or cause inflation. Bitcoin is completely independent of traditional currencies, its value depends on the confidence that it will be possible to pay with it in the future as it does today. The value of bitcoin is based purely on supply and demand on the market, in short-term sections the exchange rate is characterized by sharp price fluctuations.

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