Investors are speculating about the fate of futures-based crypto ETFs, holding around $2 billion, as a spot bitcoin ETF approval looms.
Approval of a spot bitcoin ETF may seem ominous for crypto futures funds, but their robust performance could act as a shield. Despite the launch of several futures-based crypto ETFs since late 2021. The largest, ProShares Bitcoin Strategy ETF (BITO), with $1.6 billion, doubled in value last year.
Even smaller funds, like VanEck Bitcoin Strategy ETF (XBTF) with $70 million and Hashdex Bitcoin Futures ETF (DEFI) with $2.6 million, gained over 135% in 2022.
Historically, futures-based products have been the primary choice for investors seeking packaged exposure to cryptocurrencies. While a spot product may seem like a direct threat, not everyone sees it as the demise of futures products.
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Bitcoin ETFs, Future
Sam Farao, CEO of Coinweb, acknowledges the importance of futures-based products but highlights their susceptibility to “hedging and speculation.” Despite the advent of spot bitcoin ETFs, futures-based crypto ETFs remain relevant for investors with specific needs and risk appetites.
Markus Kraus from Trading Verstehen emphasizes that futures-based ETFs offer a different risk profile and comply with distinct regulatory standards, appealing especially to institutional investors.
Despite the approaching Jan. 10 SEC ruling on the first spot bitcoin ETF filing, BITO experienced $506 million in net inflows last year. With nearly $300 million in the fourth quarter. This suggests a sustained appetite for futures-based crypto ETFs.
However, not everyone is confident in the future of futures-based crypto ETFs once spot products become a reality. Thomas Franklin, CEO of Bitinvestor, predicts a shift in focus toward spot Bitcoin ETFs, anticipating investors to gravitate towards unfiltered exposure to bitcoin.
In conclusion, while the approval of a spot bitcoin ETF may pose challenges, futures-based crypto ETFs continue to hold their ground, offering unique advantages and catering to specific investor preferences.
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“This data underscores considerably stronger profitability in the mining sector compared to challenges experienced in 2022 and part of 2023.”
In approximately six months, Bitcoin undergo a “halving,” reducing the new bitcoins awarded to miners by half. Satoshi Nakamoto introduced this event in 2009 as an anti-inflationary measure. Occurring roughly every four years, the lead-up to halvings traditionally proves the most profitable time for crypto investors. “Buying bitcoin six months before a halving and selling 18 months after has historically outperformed a ‘buy and hold’ strategy,” affirms the analyst.
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