First Bitcoin ETF Surge | Facebook’s Metaverse Play

HISTORIC DEBUT

The first-ever bitcoin-linked exchange-traded fund debuted in the United States on Tuesday. Though ProShares Bitcoin Strategy ETF (NYSE: BITO) is not exactly what purists wanted—a fund that invests directly in bitcoin—its launch marks another watershed moment for the nascent market. It also opens up exposure to the cryptocurrency to a large segment of investors with brokerage accounts. The offering is based on cash-settled, front-month CME bitcoin futures—monthly contracts with the nearest expiration date that trade on the Chicago-based CME exchange—and comes with a management fee of 0.95%, to be paid each year as a percentage of investment’s value.

The debut could not be more successful: after a mere two days of trading, the ETF had $1.1 billion under management and its trading volume topped $1.2 billion. According to Bloomberg Intelligence data, no ETF has reached the $1 billion mark this quickly. In fact, it is close to reaching the upper limit of monthly contracts allowed to be held by one actor at the CME.

Many hope that the futures-based ETF will pave the way to ultimately launching a spot bitcoin ETF. Over 30 applications, including one from Cathie Wood's ARK Investment Management, are currently awaiting SEC’s verdict. The second bitcoin futures ETF, Valkyrie Bitcoin Strategy, launched on Friday.

CLOSER TO THE MOON

The jubilation helped the cryptocurrency market set multiple records:

• The cumulative dollar value of bitcoin options contracts open on major exchanges topped $14 billion on Tuesday, hitting the highest point since April.

• On October 20, bitcoin broke past its previous record of $64,957, set in April, reaching as high as $67,000.

• Ether hit a five-month high above $4,300 the following day.

• Simultaneously, the total market capitalization of cryptocurrencies reached an all-time peak of $2.7 trillion. Just in January, it stood at $750 billion.

As of Friday morning, the crypto market appears to be taking a breather, 2.7% down on the day, with a $2.55 market capitalization. Bitcoin and ether are also trading lower, at $61,677 and $4,035 respectively.

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FACEBOOK → METABOOK?

On Monday, Facebook announced plans to hire 10,000 people in the European Union over the next five years to help build its metaverse, defining it as a set of virtual spaces where people can interact and engage with each other via virtual reality. A few days later, we learned that the social media juggernaut is planning to change its company name next week to reflect this new focus. The news came shortly after Facebook said it would pledge $50 million to related programs and research and finally launched its new digital wallet for cryptocurrencies called Novi, with Coinbase as a custodian and Paxos Dollar (USDP) as a pilot asset. Initially, the company envisioned the product’s rollout together with its Diem stablecoin, but the regulatory backlash led to significant scalebacks.

Critics have dismissed Facebook’s push to embrace the metaverse as a bid to distract from several ongoing problems plaguing the company. Earlier this month former Facebook employee and whistleblower Frances Haugen testified before Congress where she outlined a number of alleged issues at the company, including its reluctance to change its algorithm to slow misinformation.

BLOCKCHAIN 50 CALL FOR 2022 NOMINATIONS

Over the first three years of the Forbes Blockchain 50, Forbes’ list of billion-dollar companies making meaningful use of the technology popularized by bitcoin, has become a bellwether of institutional adoption. The list shines light on how large corporations—often household names like Walmart and Novartis—are using blockchain tech to improve business processes and become more efficient and profitable. Now is your chance to help us find the best possible honorees for next year. Submit a nomination here and help us spread the word using #Blockchain50 on Twitter.

Source: Messari. Prices as of 4:00 p.m. on October 22, 2021.

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