Posted In:

Bitcoin, ETF


#409
Bitcoin's Coming Of Age

Published:

Oct 16, 2021


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Posted In:

Bitcoin, ETF

Published:

Oct 16, 2021


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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!

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Bitcoin's Coming Of Age


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