Is The New Futures-Based Bitcoin ETF Really An Inferior Product

Tomorrow the first Bitcoin Trading Fund (ETF) will be listed on the New York Stock Exchange in the US.

According to a statement announcing the planned launch, trading the ProShares Bitcoin Strategic ETF on the ticker symbol BITO will primarily “invest” in the future of Bitcoin.

The new fund has the potential to offer investors an important opportunity to gain exposure to Bitcoin without resorting to digital currency exchanges such as Coinbase and Kraken.

[Ed’s note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering this should be prepared to lose their entire investment.]

However, not all are optimistic about developments, highlighting concerns expressed by a Registered Investment Advisor (RIA) in a recent MarketWatch article by market editor Marc DeCambre. ..

The work cites Ben Croyksank, director of Flourish, an investment platform owned by MassMutual that works with RIA with more than $1 trillion in total assets under management.

“The companies we talked about were very skeptical of futures-based Bitcoin ETFs,” he said.

“The feedback I get is derivative and an inefficient form of ownership,” says Cruikshank.

Additionally, the RIA notes that the Bitcoin ETF to be launched tomorrow is a “complex futures product” and no easier than opening a Coinbase account.

“It’s hard to justify a lesser future,” said Croixank. “That’s not my feedback, that’s what the company told me.”

Several analysts have raised these concerns and voiced their views.

Ben Armstrong, Founder of BitBoy Crypto, said:

“Bitcoin spots that have to be processed with Bitcoin are much more bullish than paper-based futures.”

“But don’t let that take away from the brilliance of the whole ETF futures,” he said.

“This is a paradigm shift and allows old school investors to connect to Bitcoin.”

“This is another step towards adoption and everyone in cryptocurrency wants to see it.”

Network infrastructure company LQwD Fintech Corp. Shone Anstey, Chairman and CEO of the company, also spoke on the matter.

He said that futures-based Bitcoin ETFs would be more expensive and complex than spot-based funds.

However, the development “represents a major regulatory win for the bitcoin industry and could prompt the SEC to approve a bitcoin spot price ETF.”

Armando Aguilar, Vice President of Digital Asset Strategy at Fundstrat Global Advisors, sees the same thing.

“Future-based ETFs are not what everyone in the industry expects, but as digital assets become so massive it’s a step in the right direction,” he said.

Silvia Jabronski, co-founder and CEO of ETF sponsor Defiance ETF, also commented on the situation.

“The very exciting news is that Bitcoin in ETF format will be trading on the US market tomorrow,” he said.

“I believe this will open the world of cryptography to the masses like never before.”

“Is that the best route for investors?” Well, it depends on the investor,” said Jabronski.

“If investors don’t extract cryptocurrencies or are used to keeping them in their digital wallets, the next easiest and best way to get clean bitcoin exposure is with physical assets/it’s about buying the currency,” he said.

“The second option is likely to test confidence in investing in cryptocurrencies. It is a pioneer in terms of structures such as share prices and is already traded on the secondary market (as gray and household). “I’ll do it,” said Jabronski.

“ETFs are actually cubic derivatives of Bitcoin exposure by publicly traded shells,” he said.

“For investors who are completely new to cryptocurrency trading and unfamiliar with the direct access methods mentioned above, ETF futures are a great option.”

However, he pointed out the possible downsides that investors can face when investing in ETFs, such as ETFs that were recently approved by the US Securities and Exchange Commission.

“You have limits to potential tracking errors, additional costs associated with contango, and AUM available to rebalance funds beyond a certain amount, which creates additional risk,” he said. Ricefield.

Potential increase in demand

Some analysts have suggested that the launch of this new ETF could create more demand.

Talking about the surge in futures funds, which are due to start operating tomorrow, Aguilar said he believes it could attract significant inflows from investors even though it is not a spot ETF.

Jack MacDonald, CEO of fintech firm PolySign, is also involved.

“Overall, a Bitcoin ETF will solve a lot of the regulatory issues that many investors are explicitly looking for, so I think there will be more demand for Bitcoin than without Bitcoin,” he said. Formerly.

“But spot Bitcoin ETFs will generate more demand than Bitcoin futures ETFs, given the relative fees and costs associated with Bitcoin.”

Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ethereum, EOS and Sol.

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