To greet! This is MarketWatch reporter Francis Yue.
Cryptocurrency investors have long hoped that an exchange-traded fund investing directly in bitcoin could accelerate cryptocurrency adoption and lead to a price surge.
That cannot happen, according to Stuart Barton, co-founder and chief investment officer of Volatility Shares, the issuer of the 2x Bitcoin Strategy BITX ETF.
The Spot Bitcoin ETF is not the industry's "holy grail"; Instead, bitcoin futures ETFs are the way to go, Barton said.
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Spot ETF versus futures ETF
The U.S. Securities and Exchange Commission has approved several Bitcoin futures-based ETFs in the past, but has yet to approve anything backed by Bitcoin itself.
In June, a number of asset managers such as BlackRock BLK,
Read: BlackRock files spot bitcoin ETF. This is why it is important to the cryptocurrency industry.
Barton pointed out that this is hardly the case. Wealth managers work with Coinbase COIN,
In June, however, the SEC accused Coinbase of operating a national securities exchange, an unregistered brokerage and clearing agency.
"If the SEC were to approve an ETF whose core asset must be available domestically when traded on an exchange that the agency says is already operating as an illegal exchange, that would almost certainly be counterproductive to the SEC's claim." ' Barton said. .
For a Bitcoin ETF to be approved, “at least one exchange must be registered with the SEC as a regulated exchange in the United States and meet all compliance rules. I think it's a multi-year process," Barton said.
According to Barton, even if the Bitcoin ETF is approved, the price of the cryptocurrency is unlikely to continue to rise. According to CoinDesk, the token has gained more than 16% since its launch by BlackRock on June 15.
"It can be argued that the surge in bitcoin price will be due to the emergence of new funds in the bitcoin space," Barton said.
“But those looking to gain exposure to Bitcoin through ETFs have already done so through existing futures products. If someone runs a spot ETF and people really like the idea, they can sell their futures ETF and buy a spot ETF.” “It costs a fraction of the price of bitcoin. It will have no impact," Barton said.
However, some argue that unlike futures-based Bitcoin ETFs, they impose additional costs on investors.
These costs include the costs incurred by transferring contracts from one validity period to another. Because all futures contracts have an expiration date, funds investing in bitcoin futures must purchase new contracts to replace expiring contracts.
The mechanism could also expose the funds to the risk of "contango," which means long-dated futures contracts trade at a premium to next month's contracts, causing the funds to sell low and buy high .
Barton argued that "contango" risks don't really matter to investors.
Traders buy bitcoin on the spot market and sell the cryptocurrency through a value exchange contract, Barton said: "As a result, institutions support the spot price and the futures price through arbitration."
Cryptocurrency at a glance
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