ProShares’ first Bitcoin ETF wants to be exempt from trading restrictions and many believe it is growing too fast for the Chicago Mercantile Exchange. So let’s read more in today’s bitcoin news.
Less than a week after its launch, ProShares’ first Bitcoin ETF aims to change the way a new futures ETF works.
ProShares CEO Michael Sapir said Barron’s first company had requested a trading limit lift from the Chicago Mercantile Exchange, where it buys futures contracts for its Bitcoin ETF, and that ProShares will claim its investment in other types of derivative contracts . Bloomberg ETF analyst Eric Balchunas confirmed the news on Twitter, writing:
“Barron’s article also confirms what I heard that ProShares is requesting to be exempt from CME position limits AND that they can use swaps if necessary. Both will help a lot in maintaining visibility as $ BITO gets bigger and bigger. “
CME limits the number of BTC futures contracts that expire in the same month as 2000. Proshares can hold 4,000 contracts in November and around 5,000 contracts in general. The company holds 2133 contracts for November and 1679 contracts for October, which is 76% of its limit. The ETF invests 25% of the investor’s cash in a Cayman Islands subsidiary and then instructs the subsidiary to buy bitcoin futures contracts on the Chicago Mercantile Exchange, growing the ETF to over $ 1 billion in assets under management upon launch is.
ProShares is currently investing the remaining 75% in fund securities and the repo market, i.e. borrowing money from the repo market to leverage the investments. With leveraged cash, the company invests in futures contracts and bets with cash settlement on the futures price of BTC. The fund does this regardless of market conditions. When the price of Bitcoin goes up, Pro shares the winnings from these bets and uses the winnings to make money from the money market and borrow money to buy BTC futures. If BTC crashes, the company could lose its cash-settled bets and the cash stacks of shrinking BTC.
Sapir said ProShares is considering investing the remaining 75% in things other than stock repos and treasuries so that it can invest in futures contracts, structured notes or swaps, he said. ProShares has detailed this, and the fund can consult the SEC and invest in other products that, like all other cryptocurrencies, correlate to the price of BTC. The company says it can invest in stocks and be correlated to the crypto market, as is the case with riot miners or MicroStrategy.
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