SEC Approves First-Ever Leveraged Crypto That Futures ETF

A new era of Bitcoin starts as SEC approves its first-ever cryptocurrency featuring ETF

The first leveraged Bitcoin has been permitted by US Securities and Exchange Commission, also called (SEC). On Tuesday, June 27th, the Volatility Shares 2x Bitcoin Strategy (BITX) and ETF are preparing to launch on the Chicago Board Options Exchange.

ETFs, like stocks, may be traded on exchanges, and their prices frequently shift within the same day as they are purchased and sold. Bitcoin ETFs, also called Exchange-traded funds, are classified into futures and spot pricing. With the introduction of futures ETFs, investors can gain exposure to Bitcoin without investing in the physical commodity.

While many in the cryptocurrency business are thrilled with the introduction, some are concerned about the sequence in which they are awarded. They are perplexed why a leveraged futures product like BITX is issued ahead of a typical spot ETF.

Nate Geraci, President of ETF Store, is among those who feel the ETF space should have been prioritized. In a tweet expressing his thoughts on the announcement, he said the following.

Because the BITX is a 2x leveraged ETF, investors may raise their profit two times quicker than they would have without the leverage. Conversely, their risk of losing money increases in a less favorable market environment. As a result, although it provides more profit, it also raises the possibility of loss.

The SEC highlighted in its statement the dangers associated with trading leveraged products:

"The Fund presents different risks than other types of funds. The Fund is unsuitable for all investors and should be used only by knowledgeable investors who understand the consequences of seeking daily leveraged (2x) investment results, including the impact of compounding on Fund performance."

 The BITX Approval is Great News for the Cryptocurrency Industry

 With the SEC's numerous litigations against crypto firms, particularly the current cases against Binance and Coinbase, one may assume that the SEC's chairman, Gary Gensler, is anti-cryptocurrencies. However, recent changes may give new insights into how the regulatory body views cryptocurrency.

In a tweet, Eric Balchunas, a senior ETF analyst at Bloomberg, shared his thoughts:

"The 2x bitcoin ETF $BITX has become effective, scheduled to launch Tuesday. I was doubtful it would happen, but it looks like it's official. Could this be an early sign of SEC lightening up? After the $BITO launch, I believe they made earlier 2x filers withdraw."

BTC Price Increased Following BITX News Release

The price of Bitcoin rose to US$31,450 immediately after its publication on Friday, June 23rd, as a result of the news. This is the highest price it has ever hit in a year. It is also a 5% gain over the previous day's closing price of US$29,890. The sharp price increase indicates investor confidence in cryptocurrency and that the market reacted favorably to the news.