11.01.2022, 13:58

What is Bitcoin-ETF Futures?

Spot cryptocurrency markets are virtually unregulated, while futures market rules provide some clarity for investors. After all, in the case of ProShares bitcoin futures contracts, the rules are set by the Commodity Futures Trading Commission.

There are significant differences in the work of spot and futures ETF. Conventional spot bitcoin-ETF tracks the price of real physical bitcoins. Bitcoin-ETF is backed by futures.

Futures are contracts that guarantee that the buyer will acquire the asset at a specified time, in the specified amount, at a pre-agreed price. Such contracts can be traded and they guarantee the fulfillment of agreements.

In general, the difference between these two types of ETF can be narrowed down to two points. First, spot ETF is supported by real bitcoin, and futures ETF by derivatives (in this case - bitcoin futures).

Second, the price of bitcoin futures may differ from the current market price, depending on investor sentiment, and sometimes inaccurately track the price. There is no such risk in spot ETFs.

Boom of new ETFs.

In the first 20 minutes after the launch of ProShares Bitcoin Strategy, $ 280 million was invested in its shares, and $ 1.1 billion in the first day of trading. Achieving this mark was the fastest in the history of trading. A few days after the debut of ProShares, a similar ETF was launched - Valkyrie Bitcoin Strategy. But unlike the pioneer, he did not show such an exceptional inflow of investment.

To be continued.

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