After quickly becoming too popular, the ProShares Bitcoin Strategy ETF is now on track to limit the number of futures it allows.
After only a few days of trading, ProShares ETF reached 1,900 October contracts. There is also a 2,000 front-month limit imposed in Chicago Mercantile Exchange.
Bloomberg reports that there are 1,400 open contracts for November, and that the overall limit is 5,000 contracts. Although longer contracts could be offered, this would pose a risk of being too disconnected from BTC prices.
Nate Geraci (President of the ETF Store), commented that the fund could begin to diverge from the market prices.
The ETF must obtain Bitcoin price exposure at higher prices because it is further out on futures curve.
There may be a decrease in demand for ProShares funds due to the launch of other products, such as the Valkyrie ETF, which will trade today, and VanEck ETF, which is expected trading on Monday, October 25.
Cointelegraph reported that ProShares ETF was the first fund to reach $1 billion in assets under administration in two days. The record beat an 18-year-old record held by a gold-based funds that achieved it in three days.
Eric Balchunas (an analyst at Bloomberg ETFs) stated that it will be difficult to stop the momentum at this point.
“The extraordinary early volume in BITO makes the market like a snowball rolling downhill. Liquidity and assets begets liquidity and more assets.”
Related: The VanEck Bitcoin Strategy ETF will be launched next week when crypto prices reach the ATHs
Balchunas believes that spot-based Bitcoin ETF approval may be accelerated by the success of Bitcoin futures products.
“Both ETFs’ success and general functioning may be enough to get the SEC to reconsider or create a spot for futures.”
Grayscale, as reported by Cointelegraph Oct. 18th, has already foreseen this and is currently preparing to transform its Bitcoin Trust into a physical-backed product based in spot markets.