Posted In:

Bitcoin, ETF

Bitcoin's Coming Of Age


Oct 16, 2021


Posted In:

Bitcoin, ETF


Oct 16, 2021



Bitcoin is growing up. It has been a trying journey for the long list of bitcoin ETF campaigns, starting in 2013 when the Winkelvoss twins filed the first bitcoin ETF proposal.

But soon — barring an unexpected last hour interference from the SEC — at least one US regulated bitcoin ETF product will finally hit list on a US exchange this week, with as many as 4 different bitcoin ETF products pointing towards approval in the US within the month.

The catch? The products poised to launch next week will be exchange-traded funds that own cash denominated regulated bitcoin futures contracts, rather than offering direct exposure to the spot bitcoin market. That means the ETF will be using funds to purchase the next two month bitcoin futures contracts rather than holding bitcoin.

While the differences between the two may appear negligible to non market structure wonks, there are a laundry list of items that make the futures based product less than ideal in terms of both relative cost and ability to effectively track the global reference price for bitcoin.

Research from Bitwise this week suggests that the all in costs of a futures-based Bitcoin ETF product can be as high as 15% when factoring in the annualIzed basis or spread between futures and spot prices and the cost to roll into new contracts each month. However, product imperfections aside, the launch of the first regulated bitcoin futures ETF in the U.S. marks yet another coming of age moment for digital assets, and is certainly deserving of fists pumps all around!

Portfolio News

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Bitcoin's Coming Of Age

Bitcoin exchange traded funds prepare for US debut - The ETFs are likely to be given a green light by the US Securities and Exchange Commission, marking the culmination of an eight-year battle to win approval. All the ETFs will be based on bitcoin futures contracts, rather than the spot price, with the SEC known to be concerned about a potential lack of liquidity and the risk of price manipulation on spot exchanges. Read more

Cathie Wood's ARK Invest throws weight behind new bitcoin futures ETF - The proposed ETF, called ARK 21Shares Bitcoin Futures Strategy, is an attempt by the fund managers to take advantage of the surge in cryptocurrency this year. However, the SEC has yet to approve a bitcoin ETF. Other asset managers and exchanges such as Fidelity, CBOE Global Markets and Nasdaq are also waiting for the green light to launch ETFs tracking the digital currency. Read more

SEC set to allow bitcoin futures ETFs as deadline looms - The regulator isn’t likely to block the products from starting to trade next week, said people familiar with the matter. Unlike Bitcoin ETF applications that the regulator has previously rejected, the proposals by ProShares and Invesco Ltd. are based on futures contracts and were filed under mutual fund rules that SEC Chairman Gary Gensler has said provide “significant investor protections.” Read more

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Select Financings

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