Tag: Chicago Mercantile Exchange

VanEck Announces Launch of Ethereum Futures ETF (EFUT)

by Blockchain News

VanEck, a renowned player in the financial markets, has unveiled its plans to launch the VanEck Ethereum Strategy ETF (EFUT). This actively managed exchange-traded fund is strategically designed to target capital appreciation through investments in Ethereum (ETH) futures contracts. Notably, EFUT will not directly invest in ETH or any other digital assets.

The fund’s investment strategy revolves around standardized, cash-settled ETH futures contracts. These contracts are actively traded on commodity exchanges that are registered with the Commodity Futures Trading Commission (CFTC). It’s worth mentioning that, at present, EFUT primarily intends to engage with ETH futures traded on the Chicago Mercantile Exchange.

EFUT will be listed for trading on the CBOE (Chicago Board Options Exchange) and will be under the active management of Greg Krenzer, who serves as the Head of Active Trading at VanEck. With over two decades of experience in trading across various asset categories, including futures, Mr. Krenzer brings a wealth of expertise to the fund’s management.

This strategic move to introduce EFUT complements VanEck’s existing offering, the VanEck Bitcoin Strategy ETF (XBTF), which also focuses on futures contracts related to digital assets. Both EFUT and XBTF follow a C-Corp. structure, offering a potentially more tax-efficient experience for long-term investors. Notably, XBTF does not directly invest in Bitcoin (BTC) or other digital assets.

VanEck is renowned for its forward-thinking approach in the financial markets, consistently identifying trends that create impactful investment opportunities. With a history of pioneering access to international markets, the firm has played a pivotal role in shaping the investment management industry. From gold investing in 1968 to emerging markets in 1993 and exchange-traded funds in 2006, VanEck’s commitment to innovation is evident.

As of August 31, 2023, VanEck manages approximately $80.8 billion in assets, spanning mutual funds, ETFs, and institutional accounts. The firm offers a diverse range of active and passive investment strategies, backed by robust investment processes. These strategies cater to various investment needs, from core opportunities to specialized exposures, enhancing portfolio diversification. VanEck’s active strategies are driven by in-depth research and security selection, led by portfolio managers with direct experience in their respective sectors and regions.

Since its inception in 1955, VanEck has prioritized its clients’ interests, regardless of market conditions, underscoring its core mission.

Disclaimer & Copyright Notice: The content of this article is for informational purposes only and is not intended as financial advice. Always consult with a professional before making any financial decisions. This material is the exclusive property of Blockchain.News. Unauthorized use, duplication, or distribution without express permission is prohibited. Proper credit and direction to the original content are required for any permitted use.

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Bitcoin Futures ETF Exceeds Expectations, Trades $1 Billion On Day One

by NEWSBTC

The numbers are in, and the Bitcoin Futures ETF had the biggest debut of the year. By far. We have to “exclude ETFs where their Day One volume was literally one pre-planned giant investor or BYOA,” but that’s fair. Apparently, the ProShares Bitcoin Strategy ETF got to the top naturally, via real trades by real people and institutions. Considering that just its approval by the SEC seemed to catapult Bitcoin’s price to the edge of an All-Time High, a question arises. How will the market react tomorrow? And the day after that?

Related Reading | Bitcoin ETF Check, What’s Next For BTC

But let’s avoid speculation and check Senior ETF Analyst for Bloomberg, Eric Balchunas’ charts:

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Considering the first-ever Bitcoin Futures ETF “also traded more than 99.5% of all ETFs,” it’s fair to say the launch was a huge success. What does it mean for the following ETFs? According to Balchunas, it’ll be hard for them to succeed. “Every day counts because once an ETF gets knows as ‘the one’ and has tons of liquidity, it’s virtually imposs to steal.” And, what does this mean for the market in general? NewsBTC already covered this question:

“Although these ETFs have attracted criticism for being backed by futures contracts and not the underlying asset, they could still have big implications for Bitcoin — allowing tax-sheltered and retirement accounts to easily get exposure, and potentially opening the cryptoasset to a much broader audience.”

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Why Is There A Bitcoin Futures ETF Instead Of A Bitcoin ETF?

Who better to answer this question than the SEC’s chairman himself, Gary Gensler told CNBC: 

“What you have here is a product that’s been overseen for four years by the U.S. federal regulator CFTC, and that’s being wrapped inside of something within our jurisdiction called the Investment Company Act of 1940, so we have some ability to bring it inside of investor protection.” 

So, the Bitcoin Futures ETF falls under the Commodity Futures Trading Commission jurisdiction. Plus, it tracks the Chicago Mercantile Exchange (CME) Bitcoin futures. And the SEC considers that the institutional support will protect the customer. According to them, the underlying asset, Bitcoin, is too volatile and subject to manipulation.

The first persons to propose a Bitcoin ETF in the USA, the Winklevoss twins, lament that when they did the price of Bitcoin was $68 and nowadays is $64K. “That’s almost a 1000x return in the meantime. I’m glad we got here, but it has taken too long.”

Also a skeptic of the Bitcoin Futures ETF‘s long term potential, Anthony Bertolino, VP of growth at iTrustCapital, told CNBC:

“The launch of the first bitcoin-linked ETF in the U.S. will bolster the broader crypto market and help an entirely new investor class experience the benefits of bitcoin as a legitimate asset. However, a derivatives-based bitcoin ETF is not where we want to be long-term.”

BTCUSD price chart for 10/20/2021 - TradingView

BTCUSD price chart for 10/20/2021 - TradingView


BTC price chart for 10/20/2021 on Forexcom | Source: BTC/USD on TradingView.com

What Are The ProShares Bitcoin Strategy ETF’s Characteristics?

The next few days will be crucial for this story. There’s a possibility that today’s demand was orchestrated, at least in part. If this happened, it’ll be very obvious in the following days. In any case, the fund’s official site defines the first Bitcoin Futures ETF as:

“ProShares Bitcoin Strategy ETF (BITO) is the first U.S. bitcoin-linked ETF offering investors an opportunity to gain exposure to bitcoin returns in a convenient, liquid and transparent way. The Fund seeks to provide capital appreciation primarily through managed exposure to bitcoin futures contracts.”

Related Reading | Grayscale Investments Set to File for Bitcoin Spot ETF as Competition Heats Up

And alerts the clients that “The fund does not invest directly in bitcoin,” and that “The price and performance of bitcoin futures should be expected to differ from the current “spot” price of bitcoin.” Forewarned is forearmed.

Featured Image: Screenshot of the ETF's opening bell ceremony| Charts by TradingView

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CME Bitcoin derivative traders had ‘paper hands’ as BTC broke $55K — Report

by Cointelegraph

Bitcoin (BTC) derivatives traders on the Chicago Mercantile Exchange (CME) missed out on incredible profits as BTC’s spot price smashed through $55,000 this week.

Retail investors reduced their long exposure across the Bitcoin futures and options markets in late September, according to data shared by Ecoinometrics. The amount of open short positions also climbed, indicating that derivative traders anticipated Bitcoin’s price to drop, as shown in the chart below.

CME Bitcoin derivatives — retail traders. Source: CFTC “Commitments of Traders” report, Ecoinometrics

The data was taken on Sept. 28, when BTC price had fallen below $41,000 on Coinbase — down almost 23% from its month-to-date high near $52,950. The drop surfaced in the aftermath of China’s decision to ban all kinds of crypto transactions.

“Most likely, this dip is due to a mix of traders not rolling their long positions to the October contract and some outright liquidating when BTC looked like it was going to drop below $40k last week,” said Nick, an analyst at Ecoinometrics.

“Regardless, the overall picture is that the futures traders lack conviction.”

“That’s paper hands 101,” the analyst noted.

Smart money

Institutional investors in the CME Bitcoin futures market also followed retail sentiment as they reduced their long exposure in the market. But, on the other hand, their short positions climbed.

CME Bitcoin derivatives — smart money. Source: CFTC “Commitments of Traders” report, Ecoinometrics

With CME options traders convinced that Bitcoin price would drop, the number of puts — an implicitly bearish bet on Bitcoin’s price — turned out to be almost twice the size of the calls, or bets on potential Bitcoin price gains.

CME Bitcoin options — puts vs. calls open interest. Source: Ecoinometrics

Traders’ position distribution made $40,000 the most sought-after strike price target.

On the other hand, some options traders bet that the spot Bitcoin price would hit $60,000 by the end of October. Additionally, analyst Crypto Hedger highlighted that Bitcoin options expiring on Nov. 26 show bulls’ sentiment skewed toward the $80,000-strike target.

Buy/sell volume in the last 24 hours for Nov. 26 Bitcoin options contract. Source: Laevitas, Crypto Hedger

“At this current growth pace, Bitcoin has formed very strong support at the $50,000 price point, and short-term traders may also need to watch out for the key resistance level around $56,000,” said Konstantin Anissimov, executive director of CEX.IO, adding:

“A break below or above these levels can stir another cataclysmic price reversal or a massive run toward $60,000 in Q4.”

Bitcoin supply squeeze in play

On-chain data shared by Ecoinometrics also showed a higher level of Bitcoin withdrawals from all the crypto exchanges.

In detail, Bitcoin’s 30-day net exchange flow has been rising since July 2020, as noted in the color-coded chart below, with blue and red indicating extreme outflow and inflow, respectively.

Bitcoin rolling net exchange flow. Source: Coinmetrics

Ecoinometrics noted that the amount of Bitcoin currently leaving exchanges is higher than it was in the previous four-year halving cycles.

Bitcoin rolling net exchange inflow (second halving vs. third). Source: Coinmetrics 

Meanwhile, traders see the reduction in Bitcoin’s supply on exchanges, with increasing “hodling” activity, as further catalysts for a liquidity crisis and more price upside.

Related: Bitcoin ‘heavy breakout’ fractal suggests BTC price can hit $250K–$350K in 2021

“Back then there were indeed periods of net outflows but in terms of size they look much less dramatic than what we have right now,” Ecoinometrics highlighted, adding:

“That’s another sign that we are on course for a liquidity crisis which could drive Bitcoin’s value much higher than it is right now.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.