What You Need to Know
- The two Bitcoin futures ETFs that launched last week are trading below their initial prices.
- Yet more firms are filing ETF applications to trade Bitcoin futures, even though one would short the futures.
- Investors will incur costs when rolling from front-month Bitcoin futures contracts to later months.
Filings for Bitcoin futures ETFs are proliferating following the launch of two such ETFs last week.
Valkyrie Investments, sponsor of the second Bitcoin futures to launch last week, on Tuesday filed for a leveraged Bitcoin futures ETF with the Securities and Exchange Commission. The ETF would deliver 1.25 times the reference price for Bitcoin.
The same day, Direxion, known for leveraged and inverse ETFs, filed for an ETF that would short Bitcoin futures, allowing investors to place a negative bet on the contract.
Also in the recent mix: a filing by VanEck to trade a Bitcoin futures ETF that would have lower fees (65 basis points) than the two Bitcoin futures that launched last week — the ProShares Bitcoin Strategy ETF (BITO) and the Valkyrie Bitcoin Strategy ETF (BTF) — which charge 95 basis points. VanEck also has a pending application for an ETF based on actual Bitcoin.
What Your Peers Are Reading
Bitcoin futures filings are growing in number despite the recent drop in Bitcoin prices, which had rallied in anticipation of the Bitcoin futures ETF launches, and the decline in the prices of those ETFs, now trading below their initial launch prices even though the ProShares ETF amassed more than $1 billion in assets in its first two days.
Ben Johnson, director of global exchange-traded fund research at Morningstar, writes in a recent report that Bitcoin futures ETFs “are a bad deal for investors” and “a lousy option for long-term exposure to Bitcoin.”