Bitcoin, the sizzling hot cryptocurrency, topped $11,000 early Wednesday and is up more than 50% just this month, leaving investors to again ponder the fate of bitcoin ETFs. Money managers in the ETF industry are working on a bitcoin ETF, and the upcoming batch of cryptocurrency-related funds will likely track bitcoin futures.
Bitcoin’s new all-time high came just about 12 hours after the cryptocurrency smashed through the $10,000 mark that many analysts had been hyping for months.
The exchanges are working on bitcoin futures in response to rising demand to trade cryptocurrency-related products on a platform many traders are comfortable with. Additionally, a futures-backed bitcoin ETF would benefit the Cboe, which lists ETFs on its equities markets.
Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies. They are also a key component in the creation of many futures-backed ETFs utilized by a range of investors.
“The assumption is that the trading of bitcoin futures will bring the next logical move: bitcoin exchange-traded funds, which will bring more attention to ETFs and further push legitimization of bitcoin,” reports CNBC. “These are technically listed as exchange-traded products, since they would only be trading a single commodity, in this case bitcoins.”