The first US Bitcoin futures-based exchange-traded fund began trading on Tuesday, sending bitcoin to a six-month high and within striking distance of its all-time peak, as traders bet the ETF could boost investment flows into cryptocurrencies.

The ProShares Bitcoin Strategy ETF began trading on Intercontinental Exchange Inc's NYSE Arca on Tuesday under the ticker BITO after being greenlighted by the US Securities and Exchange Commission.

Bitcoin futures have been overseen by the Commodity Futures Trading Commission for four years and ETFs - securities that track an asset and can be bought or sold on a stock exchange - are regulated by the SEC, offering some level of investor protection, SEC chair, Gary Gensler, said on Tuesday.

"Yet it's still a highly speculative asset class and investors should understand that underneath, there is the same volatility and speculation," he told CNBC.

Bitcoin, the world's biggest cryptocurrency, touched USD 63,337.54 after the listing, its highest since mid-April and near its record of USD 64,895.22.

Known throughout its 13-year life for its volatility, bitcoin has risen by some 40 percent this month on hopes the advent of bitcoin ETFs - of which several are in the works - will see billions of dollars managed by pension funds and other large investors flow into the sector.

The BITO ETF was last at USD 40.95, up slightly from its USD 40.88 open.

"It has traded tightly, within a penny of fair value pretty much all morning, so it's part of the ecosystem," said Dave Nadig, chief investment officer and director of research at ETF Trends.

The ETF had traded around USD 500 million worth, notionally, by late morning, which is "about what we would expect for a media-darling first launch in the space," he said.

Much of BITO's initial volume appeared to be from retail investors, as there were only four block trades, above 10,000 shares, all morning, Nadig said.

Nasdaq Inc on Friday approved the listing of the Valkyrie Bitcoin Strategy ETF, and Grayscale, the world's largest digital currency manager, plans to convert its Grayscale Bitcoin Trust into a spot bitcoin ETF, the company confirmed.

Crypto ETFs have launched this year in Canada and Europe amid surging interest in digital assets. VanEck and Valkyrie are among fund managers pursuing US-listed ETF products, although Invesco on Monday dropped its plans for a futures-based ETF.

The SEC has yet to approve a spot bitcoin ETF.

Bitcoin futures were up 2.21 percent at USD 63,035.

First Published:Oct 19, 2021 10:11 PM IST