Futures are the most popular form of cryptocurrency trading, with futures volume exceeding spot trade volume. If there’s one thing that blockchain can help fix it is this issue by enabling faster and easier transactions on otherwise slow markets.

Bitcoin Futures ETF is so popular that it has already breached the limits set by TradFi, which are intended to prevent market manipulation. The creation of futures for Bitcoin will be a big part in how the cryptocurrency community regulates itself moving forward.

The “cryptocurrency etf list” is a new type of investment that has been gaining a lot of popularity. The cryptocurrency futures ETF is so popular that it’s breaching the limits set by TradFi.

Bloomberg reported that the first Bitcoin (BTC) exchange-traded fund in the United States is swiftly approaching a restriction on the amount of futures contracts it may own.

The ProShares Bitcoin Strategy ETF (BITO) has roughly 1,900 contracts for October, only days after its inception, while the Chicago Mercantile Exchange (CME) restricts front-month contracts to 2,000.

Trading volume is at an all-time high.

According to the story, the fund had more than $1 billion under management after only two days of trading.

To avoid violating the limit, the Bitcoin Futures ETF acquired 1,400 November contracts, but judging by the exceptional early trading, BITO might soon approach the maximum total position of 5,000 contracts.

While restrictions were increased at the end of October (and our futures expert believes they will be lifted again if necessary), we are still more than a week away. Here’s what CME has to say about it right now, according to their website: pic.twitter.com/3VYM8W33P0

October 21, 2021 — Eric Balchunas (@EricBalchunas)

The introduction of competitor products like Valkyrie’s and VanEck’s Bitcoin Strategy ETFs might reduce demand for BITO.

One way for BITO to avoid meeting the limit is to spread out its holdings over longer-dated contracts, but this risks further separating the fund from Bitcoin’s performance.

According to Nate Geraci, head of advice company The ETF Store, “the ultimate outcome is the ETF will start taking on potentially considerable tracking inaccuracy against the current price of Bitcoin.”

“As it moves farther out on the futures curve, the ETF is compelled to seek Bitcoin price exposure at higher and higher levels,” he stated.

Bitcoin exchange-traded funds (ETFs) based on spot prices come to the rescue.

According to Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, who remarked on the paper, “the record early activity in BITO makes it like a snowball sliding downhill, as liquidity and assets beget greater liquidity and assets.”

“The new ones will have certain selling advantages, such as simply holding the front month or being cheaper, and that will help, but stealing volume in the short or medium term is practically impossible,” he continued, noting that the ProShares fund’s momentum would be difficult to halt.

According to Balchunas, the success of BITO and “the evident problem of futures potential capacity” may lead the SEC to approve Bitcoin spot ETFs more quickly.

The crucial word here is “may,” although both the popularity and general functioning of ETFs, as well as the evident problem of futures’ potential capacity, may persuade the SEC to rethink or figure out a way for spot. That would undoubtedly be a simple method to deflect the shock flow-a-thon away from the futures market.

October 21, 2021 — Eric Balchunas (@EricBalchunas)

For the report, he noted, “That surely would do the work in slowing down BITO and creating a release valve for futures demand.”

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