Bitcoin’s ProShares ETF strategy is getting close to hitting the limit for allowed futures contracts after it quickly became very popular.
In just two days of trading, the ProShares ETF reached 1,900 contracts sold in October, and the Chicago Mercantile Exchange set a limit of 2,000 forward contracts.
As of November, 1,400 contracts have already been concluded, and according to Bloomberg, the total ceiling is 5,000 open contracts. One solution might be to offer longer contracts, but that might involve the risk of going too far away from bitcoin prices.
Nate Geraci, head of ETF Store consultancy firm, commented that the fund could begin to move away from market prices, adding:
“The ETF is forced to access the bitcoin price at a higher and higher price as it moves along the futures curve.”
The launch of competing products, such as the Valkyrie Bitcoin Strategy ETF, which starts trading today, and the VanEck ETF, which is expected to start trading on Monday, October 25, could reduce demand for the ProShares fund.
According to Cointelegraph, the ProShares ETF was the first fund to reach $ 1 billion in total assets in just two days. He broke the record of an 18-year-old boy who previously held a golden chest made of wood.
Eric Balchonas, chief analyst at Bloomberg, said it would still be difficult to stop the momentum at this stage.
“BITO’s unique early scale makes it like a snowball rolling downhill where liquidity and assets create more liquidity and assets.”
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Balchunas also believes that the success of bitcoin futures products could accelerate the immediate approval of an existing bitcoin ETF.
“Both the success and overall performance of the ETF and the obvious question about the potential of futures contracts could prompt the SEC to reconsider its decision or trade at an immediate price.”
As Cointelegraph reports on Oct 18, Grayscale has already foreseen this and is gearing up to make the popular Bitcoin Trust a truly supported product based on the spot markets.