Bitcoin

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

the first usa bitcoin etf is scheduled to launch october 19 (bitcoin/us dollar), the most popular pair in the world. big bitcoin logo.

tomorrow, the first bitcoin exchange-traded fund (ETF) in the us. uu. It is scheduled to go public on the New York Stock Exchange.

Reading: Is the new futures-based bitcoin etf really an inferior product

The proshares bitcoin etf strategy, to be traded under the symbol bito, will invest “primarily” in bitcoin futures, according to a statement announcing the planned launch.

This new fund could give investors a great opportunity to gain exposure to bitcoin without using a digital currency exchange like coinbase or kraken.

[editor’s note: investing in cryptocurrencies or tokens is highly speculative and the market is largely unregulated. anyone considering it should be prepared to lose their entire investment.]

However, not everyone has taken a rosy view of this development, with a recent MarketWatch article, written by markets editor Mark Decambre, emphasizing the concerns expressed by Registered Investment Advisers (RIAs).

The article quoted Ben Cruikshank, head of investment platform Prosper, which is owned by MassMutual and works with Rias, who have a combined total of more than $1 trillion in assets under management.

“The companies we are talking to are extremely skeptical” about a futures-based bitcoin ETF, he said.

“The answer I get is that a derivative is a less efficient form of ownership,” cruikshank noted.

In addition, Rias has noted that the bitcoin ETF scheduled to launch tomorrow is a “complicated futures product” that is less straightforward than opening a Coinbase account.

“It’s hard to justify an inferior futures product,” Cruikshank said. “That’s less my feedback and more what companies tell me.”

Several analysts weighed in on these concerns and offered their perspective.

“Cruikshank is correct,” said ben armstrong, founder of bitboy crypto.

See also: Should You Buy the Crypto Dip While Bitcoin and Ethereum Prices Are Down? | NextAdvisor with TIME

“spot bitcoin that needs to be settled in bitcoin is much more bullish than paper-settled futures.”

“but don’t let that take the shine off a futures etf as a whole,” he said.

“This is a paradigm shift. and it is giving old-school investors the opportunity to get exposure to bitcoin.”

“it’s just another step towards adoption, which is what everyone in crypto likes to see.”

shone anstey, president & The CEO of network infrastructure company LQWD Fintech Corp. also spoke on the matter.

pointed out that the futures-based bitcoin etf would have higher costs and complexity compared to a spot-based fund.

However, this development “represents a major regulatory victory for the bitcoin industry and may encourage the SEC to approve a bitcoin spot price etf.”

armando aguilar, vice president of digital asset strategy at fundstrat global advisors, provided a similar point of view.

“A futures-based ETF is not what everyone in the space expected, but it is a step in the right direction as digital assets enter the mainstream,” he said.

sylvia jablonski, co-founder and chief investment officer of etf sponsor defiance etfs, also commented on the situation.

“it is very exciting news that bitcoin in the etf format will be trading tomorrow in the US markets,” he said.

“I think this opens up the world of crypto to the masses like never before.”

“Is it the best vehicle for investors? well, it depends on the investor,” Jablonski said.

See also: A 22-Year-Old Bitcoin Millionaire Revealed How He Got Rich

“Assuming the investor is not mining crypto or not comfortable with storing it in a digital wallet, the best and easiest way to gain pure bitcoin exposure is to buy the physical asset/currency,” he stated.

“The second option may be to look for trusts that invest in cryptocurrencies. those are first movers in terms of exchange-traded fund-like structures, and are already being traded on the secondary market (as grayscale and bitwise),” Jablonski said.

“the etf is really the third derivative of bitcoin exposure through a publicly traded wrapper,” he stated.

“for investors who are new to cryptocurrency trading and not comfortable with the aforementioned ways of gaining direct access, futures-based etfs are a good alternative.”

However, he made sure to point out the potential drawbacks investors could face when investing their money in ETFs like the one that just received US approval. uu. National Stock Market Commission.

“they have the potential for tracking error, additional costs associated with contango, and limits in terms of aum available to rebalance the fund after a certain size, which represents additional risk,” he noted.

possible increase in demand

The introduction of this new ETF could potentially result in increased demand, several analysts noted.

Aguilar touched on the proliferation of futures-based funds like the one launching tomorrow, noting that while they are not spot ETFs, he still believes they will succeed in attracting substantial investor inflows.

jack mcdonald, CEO of fintech firm polysign, also weighed in.

“Overall, I think a bitcoin ETF will create more demand for bitcoin than not having one because it solves a lot of regulatory issues that many investors are seeking clarity on.” he stated.

“That said, a bitcoin spot ETF would generate much more demand than a bitcoin futures ETF given the relative costs and fees associated with the latter.”

disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, eos, and sol.

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