18 Oktober 2021

Market Opening: SEC’s approval of the first ETF on Bitcoin Futures

Patrick Heusser

Patrick Heusser

CEO bei Crypto Finance (Brokerage) AG

Über den Autor

I know that you probably heard it over a hundred times over the weekend… But it does look like the SEC will approve the first ETF on Bitcoin Futures.

There has been a broad discussion about whether or not this product really suits retail customers. Especially from a performance point of view, you can argue that it is not perfect. I am referring here to the negative carry that most likely would prevail if the underlying asset was in a bull market. In a normal market, the expected conditions would be that the negative carry would be around 5-10% on an annual basis. If you add that to the TER (total expense ratio), it ends up being an expensive product (compared to just spot buying bitcoin and self-storing it).

I think there are better products out there if you are a retail investor and would like to get exposure, but not physically buy bitcoin, and instead get it through a traditional product. E.g. the Grayscale Bitcoin Trust (GBTC), which is currently trading at a 15% discount to the spot price.

But I do not want to make this short market commentary a rant against the SEC. I think it is a pretty big step forward for them and also for the crypto industry. I believe the SEC needs more certainty that the largest crypto spot exchanges are playing by “their” rules to approve a spot-based ETF.

But don’t forget: crypto moves about 10x faster than TradFi. So, let’s give the regulatory body a bit of time to catch its breath.