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BITO bitcoin ETF is headed for trouble with position limits looming

  
Analysis, BITCOIN
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Bitcoin ETF has used up two-thirds of its position limit

Bitcoin ETF has used up two-thirds of its position limit
Bitcoin is down today so there might be some flows out of the new US bitcoin ETF (BITO) that launched on Tuesday. The larger problem is that it is destined to run into position limits. According to Bloomberg, it can only hold 5000 futures contracts due to CME rules and is already two-thirds of the way there. Another $600m would get it to the limit.
An option is to buy longer dated contracts but that’s going to introduce a negative tracking error with long-dated futures trading above spot. I don’t see the volume slowing down so eventually this is going to be a big problem.
This all comes back to the SEC, which has tried to shove everything into the futures market to please the people at the CME. In something like oil — which is extraordinarily difficult to store, transport and physically transact — a futures-based ETF makes sense but in bitcoin it’s stupid.
An ETF holding ‘physical’ bitcoin is obvious and should have been approved five years ago. There’s no tracking error and it would have alleviated so many problems with scam brokers and the huge tracking error in the Greyscale bitcoin trust. Hopefully this expedites it.
In any case, it makes you wonder why every decision seems to benefit the CME.

Pimco to gradually invest and trade more in cryptocurrencies

  
Analysis, BITCOIN

PIMCO’s chief investment officer spoke in a CNBC interview.

  • “Now we’re looking at potentially trading certain cryptocurrencies as part of our trend-following strategies or quant-oriented strategies, then doing more work on the fundamental side”
  • “So this will be a gradual process where we spent a lot of time on the internal diligence side speaking to investors. And we’ll take baby steps in an area that’s rapidly growing.”
Pacific Investment Management Company (PIMCO) is a US firm that manages circa US$1.9 trillion in assets
BTC has been on a rip:
PIMCO's chief investment officer spoke in a CNBC interview. 

Bitcoin ETF set to start trading

  
Analysis, BITCOIN

I expect this will be one of the best ETF debuts ever

Bitcoin ETF poll
Welcome to the BITO era in bitcoin trading.
That’s the ticker for the Bitcoin futures ETF that’s set to debut at the bottom of the hour. I would have loved to see multiple bitcoin ETFs approved at the same time so we could see a horse race and have the market decides. As we saw in Canada, the first out of the gate gets all the volume and the race is pretty much over after that.

Will China’s cryptocurrency ban slow a wider adoption of digital coins?

  
Analysis, BITCOIN

An overview of China’s crackdown on cryptocurrencies

IFX
Cryptocurrencies in China have been under constant threat, but they have never been considered illegal. This scenario could change. In late September, Chinese regulators stated that mining cryptocurrency and crypto trading or crypto use as legal tender is forbidden. The statement came from the Chinese central bank, the People’s Bank of China, citing the need to regulate and maintain national security. China has tried to curb the use of digital coins for more than eight years. The Chinese government is transparent in saying that cryptocurrencies are not legitimate coins, and their existence is a risk to the Chinese financial sector. Before this announcement, the crackdown on cryptocurrencies by the Chinese government had been piecemeal. This statement was the first that laid down the gauntlet. The question for investors is whether the Chinese ban on cryptocurrencies will slow the broader adoption of cryptocurrencies.

What Has Changed from Prior Crackdowns? (more…)

Bitcoin passed the test, now it passes $57,000

  
Analysis, BITCOIN

A lesson in what happens when something can’t go down

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Bitcoin is up $3200, or 6%, since Friday and has broken above $57,000 for the first time since May.
On Friday, I was highlighting the mounting case for buying it. We’ve seen a barrage of negative news lately including a(nother) ban from China and it became increasingly clear the White House has also taking aim at crypto.
Yet none of those headlines even dented bitcoin. When something can’t fall on bad news, it’s not going to fall at all.

SEC head Gensler says the US won’t ban cryptocurrencies

  
Analysis, BITCOIN

An ICYMI from a little earlier, Bloomberg with the article on remarks from Securities and Exchange Commission Chair Gary Gensler

Was speaking at a House hearing after a Republican lawmaker asked if a China-like prohibition was on the table in the US
  • says the US won’t follow China’s lead in banning digital tokens
  • US government’s focus is on ensuring that the industry adheres to investor and consumer protection rules, anti-money laundering regulations and tax laws
BTC gave it a like … adding to gains:
An ICYMI from a little earlier, Bloomberg with the article on remarks from Securities and Exchange Commission Chair Gary Gensler
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