But approval is an opportunity to create hype and buzz around cryptocurrency.
The issue isn't just additional volatility and tracking error, but the fact that the con tango creates a "roll yield" which affects the long-term returns of the strategy. To keep constant maturity exposure, the futures ETF has to constantly "roll" its positions into further dated contracts. In particular because the market tends to be in contango it means further dated futures tend to be higher priced than near dated futures. So usually the futures ETFs in their daily rebalancing are selling cheap near dated contracts for more expensive longer dated contracts. Hence the roll yield tends to be negative. Then add all the transaction costs from daily rebalancing. It should be clear why the futures strategy has inferior returns to simply holding spot.
Spot Bitcoin ETFs truly are a game changer compared to futures ETFSs.
They are terrible assets with severe discount/premium swings reaching the high 40%s [0]. The ratio's only tightening now that a potential arbitrage opportunity is on the table.
[0] https://ycharts.com/companies/GBTC/discount_or_premium_to_na...
Tracking for actual BTC futures ETF's is quite good. Arbitrary example: https://ycharts.com/companies/BITO/discount_or_premium_to_na...
GBTC has diverged so far because it doesn't have a public creation/redemption mechanism. Matt Levine briefly touched on this recently: https://www.bloomberg.com/opinion/articles/2024-01-04/put-th...
It gives credibility to the thing that explicitly does not want credibility. Or at least didn’t. Maybe it does now. I don’t know.
And it hardly matters that wrapping it in an ETF makes it potentially really weird (like how GLD and other gold ETFs are only barely nominally like holding gold, and VIX ETFs often hold cash-settled futures based on the value of a formula that is based on another formula that takes in various parameters of the prices and durations of options which themselves are priced based on the price movements of various equity securities and .........). The depths of weirdness have already been pretty well-explored by existing weird ETFs. A bitcoin ETF wouldn't even be particularly notable levels of weird, imo.
So, just the fact that it makes it really easy is typically a big boon to people getting exposure to whatever financial force the ETF holds.
- The ones who don't believe it, and sell off their inflated coins after the price jumps
- The ones who do believe it, and are the rubes the first group is counting on
It's possible to do it now, but not easy.
There is a friction that would undoubtedly be solved by bitcoin ETFs. There's hundred of millions of causal investors who prefer to simply treat btc as any other stock and don't want to bother with actual ownership of the asset in any form and don't want to have to deal with anything different from normal stocks. And lowering friction increases usage.
But to your larger, exaggerated ("everyone"), question: It'll make it easier to include bitcoin as a part of larger trades when it can be bought and sold and used as collateral like a regular stock. It'll be another tool used by professional traders. I don't think it'll be a world-changing event, and like you said, it's probably not going to increase aggregate demand as trading desks will shift out of complicated ownership structures to use the ETF instead.
$BITO and $BITI
and anyone could get an annuity
and anyone can buy spot gold
and yet