The first Bitcoin futures exchange-traded fund (ETF) to list on the US stock market received regulatory approval and investors immediately took notice. The listing also turned out to be a hit as demand poured in quickly, making it clear that this is only going exponential from here!
#1. The Basics – What is a Bitcoin ETF? Difference Between Spot and Futures ETFs
The idea of an ETF for Bitcoin has been gaining momentum. An exchange-traded fund is just like any other mutual or various type fund in that it pools investors’ money together and then invests into different assets, including but not limited to stocks. However, with bitcoin, there are some limitations because regulations haven’t yet caught up allowing them access globally which means this investment vehicle would only track what happens within America at first until things progress further still over time.
You might be wondering why a Bitcoin ETF is so important. Well, if you buy shares in an ETF and the underlying asset goes up 10%, then your investments will also shoot up by that much! This means it could help investors recover some of its losses caused due to poor market performance or other reasons such as Government regulations on cryptocurrency trading platforms like GDAX/Coinbase etc.
Bitcoin futures ETFs are a popular way for investors to trade bitcoin without actually holding the cryptocurrency. They come in different varieties, with some tracking prices of spot market and others rolling over contracts based on their value at the time you make your investment decision: this means that even if there’s an increase or decline during that period between when they’re bought and sold (which can happen!), it doesn’t affect what we’ve invested into!
The difference between a Bitcoin ETF and cryptocurrency futures can be determined by the cost of buying or selling one share. The premium price for an exchange-traded fund (ETF) will depend on demand, as it’s speculated that there may not be enough interest in corresponding bitcoin instruments to make them worth investing in currently.
While prices remain closer together than those associated with asset-based funds such as stocks and bonds; bitcoins are trading at discounts when compared against their underlying instrument – Futures contracts.
ETFs are becoming more popular among investors who want to invest in cryptocurrency without actually holding any. This new class of ETF includes Bitcoin, but doesn’t touch other coins on the market – it just gives you access by providing shares that trade like a stock would do at different times throughout the day/weekend depending upon when they get bought back from those buying them up before selling again later down the line so there’s never really less than 1 share available per investor ever since demand always exceeds supply even though some people have been selling theirs lately because prices had gone way too high.
Beyond’s CEO, John Manzi, explains, “The primary function of ETFs to-date has been to provide exposure to an asset class by tracking a basket of investments with a common connection, e.g. oil, biotech, gold, or natural gas. There are also stock index ETFs which track broader markets, like the S&P 500.”
#2. Why Bitcoin Futures ETF?
The SEC has rejected multiple applications for a Bitcoin ETF over the years, but that may all change with Gary Gensler at their helm. The head of the agency’s trading division recently bashed crypto as being ‘wild west’ and hinted strongly in favor of futures-based Cryptocurrency based funds.
ProShares has filed an application with the Investment Company Act of 1940. This puts it in line to receive better protection for investors than other types of fund management, which are not so legally robust.
Proshares is one ETF that tracks Bitcoin futures prices from CME Group Inc., makers and sellers on these contracts have often been blamed when cryptocurrencies plunge during sell-offs like this past weekend’s panic selling episode resulting at least partially because they’re unable to hedge their exposure.
#3. Spot Bitcoin ETF Still in Demand
It’s clear that the Bitcoin ETF is here to stay, and while some people might be put off by its volatility or complexity – not everyone has been able to get on board with cryptocurrencies yet. The first of these cryptocurrency futures were recently listed on US stock exchanges; however more than a dozen such applications still await approval (though it seems like this won’t last long).
The approval of a spot ETF for Bitcoin might be hindered by the launch of an exchange-traded fund that tracks its value. If this future product succeeds in satisfying investor demand, the SEC may argue against approving another type of ‘spot’ bitcoins because it will no longer need them if their investment can profit off current prices as these do now with future contracts.
It’s been a long time since we’ve seen an ETF approved. But many experts are taking the latest one as evidence that they will be getting close to approval for their own cryptocurrency, and it seems like you can’t swing an investment based on Ethereum or Bitcoin without hitting them in this article!