Key Points
- The SEC approves the first leveraged Bitcoin futures ETF, BITX, for launch on the CBOE BZX Exchange.
- BITX aims to provide double the return of the CME Bitcoin Futures Daily Roll Index.
- The introduction of a leveraged Bitcoin futures ETF brings potential for increased investment returns but also carries the risk of significant losses.
The U.S. Securities and Exchange Commission (SEC) has given the green light to the very first leveraged Bitcoin futures exchange-traded fund (ETF) on a Friday. This comes as exciting news for the crypto community, as the BITX or “Volatility Shares 2x Bitcoin Strategy ETF” is set to launch on the CBOE BZX Exchange next Tuesday, June 27.
The SEC Filing
As per the SEC filing, BITX is designed to “seek investment results that correspond to two times (2x) the return of the Chicago Mercantile Exchange (CME) Bitcoin Futures Daily Roll Index.”
For those unfamiliar with the concept, an ETF, or exchange-traded fund, is a bundle of securities such as stocks and commodities. Investors have the option to acquire ETF shares, which enables them to have a stake in those securities without the need to possess them directly. In the case of Bitcoin ETFs, there have been two primary types: Bitcoin futures and Bitcoin spot. With this new development, investors can now enjoy the benefits of a leveraged Bitcoin futures ETF, giving them the opportunity to potentially double their investment returns.
BITX fund on a Role
The BITX fund is set to become a leveraged ETF, which means it will use debt or financial derivatives such as Bitcoin futures to boost the returns of a benchmark index. While this can lead to short-term gains for investors, it also carries the risk of significant losses. The announcement of the BITX fund has been met with enthusiasm from cryptocurrency supporters, but it has also raised some questions. Nate Geraci, co-founder of the ETF Institute, took to Twitter to express his thoughts on the matter.
The 2x bitcoin ETF $BITX has become effective, scheduled to launch Tuesday. I was doubtful it would happen but looks like it’s official. Could this be early sign of SEC lightening up? After $BITO launch I believe they made earlier 2x filers withdraw pic.twitter.com/XXxSt9xypu
— Eric Balchunas (@EricBalchunas) June 23, 2023
He believes that the launch of a 2x leveraged futures product before a straightforward spot ETF is one of the most ridiculous aspects of the Bitcoin ETF saga. He ended his tweet with the word “Wild,” emphasizing the unexpected and unconventional nature of the situation.
End Note
As the digital asset industry continues to navigate through regulatory hurdles, the approval of BITX has provided a much-needed breath of fresh air. This comes in the wake of the SEC’s recent lawsuit against two of the largest crypto exchanges, which has left many in the industry feeling uneasy. Despite concerns, BITX’s approval is a glimmer of hope for those who believe in the future of cryptocurrencies.
