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First bitcoin-linked ETF opens on Wall Street under 'BITO' symbol

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First bitcoin-linked ETF opens on Wall Street under 'BITO' symbol
Investing in a futures-based ETF is not the same as investing directly in bitcoin, but rather is an agreement to buy or sell an asset at a future date at an agreed-upon price. File Photo by John Angelillo/UPI | License Photo

Oct. 19 (UPI) -- The first exchange-traded fund linked to the cryptocurrency bitcoin made its debut on Wall Street Tuesday on the New York Stock Exchange.

ETF provider ProShares launched the fund that now trades under the ticker symbol "BITO" and tracks the bitcoin futures market, a milestone for both ETFs and cryptocurrencies.

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ProShares CEO Michael Sapir said on Monday that many investors have been "eagerly awaiting" a bitcoin-linked ETF on Wall Street, as it would allow them to track the market without setting up an account on a cryptocurrency exchange or establishing a crypto wallet.

"BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider and creating a bitcoin wallet or are concerned that these providers may be unregulated and subject to security risks," Sapir said in a statement.

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The price of a single bitcoin was $62,542 by late morning on Tuesday, just shy of its all-time high mark ($64,800). The ETF rose by about 3% shortly after its debut and closed up 4.85% at $41.94 on Tuesday afternoon.

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An ETF is a fund composed of multiple companies within the same sector that allows investors to purchase a small stake in their investment portfolio.

"Let's say you like cereal, instead of having to choose just one, you can buy the entire cereal aisle or a portion of it that is included in the ETF you are investing into," Melissa Matthews, author of the blog The GYST, said in a blog post.

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Investing in a futures-based ETF is not the same as investing directly in bitcoin, but rather is an agreement to buy or sell an asset at a future date at an agreed-upon price.

"The all-in cost of a futures-based ETF could be in the 5% to 10% range once you take into account the annualized roll yield," said Mat Houghan, chief investment officer at Bitwise Asset Management, according to CNBC.

Valkyrie, Invesco and Van Eck have joined Proshares in seeking approval for bitcoin-linked ETFs from the Securities and Exchange Commission and will be allowed to list 75 days after their paperwork was filed if the regulatory agency does not intervene.

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Some hope futures ETFs will eventually pave the way for a spot bitcoin ETF that would provide investors an avenue to purchase bitcoin itself. All 10 asset managers who have sought approval for spot bitcoin ETFs since 2017 have had them rejected.

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Cryptocurrencies have faced increased scrutiny under President Joe Biden's administration. The Treasury Department said in May that all transfers of at least $10,000 would be required to be reported to the Internal Revenue Service in a bid to crack down on cryptocurrency scams.

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