The ProShares Bitcoin Strategy ETF (BITO) is fast approaching the limit permitted by the Chicago Mercantile Exchange. Since its debut earlier this week, BITO has nearly 1,900 contracts for October. However, the CME regulations set the limit of front-month contracts at 2,000.
To avoid running afoul of the limit in the future, ProShares already collected 1,400 contracts for the month of November. However, despite these efforts, current demand might push the ETF to breach the maximum total position of 5,000 contracts. Furthermore, ProShares is already in possession of $1 billion in assets under management.
A silver lining for ProShares is that CME is raising the ceiling to 4,000 front-month contracts. The proviso however, is that the 2,000 limit will return for subsequent months.
BITO alone can hit those limits as well, but the impending arrival of competing products could slow down the tide. For instance, two other Bitcoin futures-based ETFs Valkyrie and VanEck are currently awaiting approval. The duo are looking to list next week.
Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, believes that the demand for BITO may influence the SEC to fast-track funds-approval for BTC. As he put it:
“That certainly would do the trick in slowing down BITO and providing a release valve for futures demand.”
Image Credits: Pixabay
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