Experts explained why futures exchange-traded funds based on the first cryptocurrency led to an outflow of funds from the asset and what problems are preventing the launch of ETFs based on digital coins
A month has passed since the launch of the first U.S. exchange-traded fund (ETF) based on bitcoin futures. On October 19, ProShares' Bitcoin Strategy ETF (ticker BITO) began trading on the New York Stock Exchange (NYSE). Two days after the start of trading, assets under the management of the fund exceeded $ 1 billion. The fund broke the record for the growth rate to $ 1 billion, which was held for 18 years.
On October 22, the NASDAQ started trading a Bitcoin futures ETF from Valkyrie Investments (ticker BTF). And on November 16, VanEck's Bitcoin futures ETF (ticker XBTF) began trading on the Chicago Board Options Exchange (CBOE).
Topplabs.org experts explained why the launch of bitcoin futures ETFs did not trigger impulse growth in the crypto market and when to expect approval of a spot exchange-traded fund based on the first cryptocurrency.
Exchange-traded funds, based on futures, are a rather narrowly targeted instrument, said Viktor Pershikov, a leading analyst at 8848 Invest. According to him, the infrastructure for launching such funds has existed for a long time, the only difficulty was the approval of the product by the US Securities and Exchange Commission (SEC).
“In general, market participants were waiting for the resolution of one of the futures ETFs and this event did not come as a surprise, as there were no weighty arguments against it,” the analyst noted.
The launch of bitcoin futures ETFs did not give activity to the asset itself in terms of capitalization growth, since the bulk of market participants is focused on the spot and OTC (Over-the-Counter) markets, Pershikov explained. He added that although the volume of trading in Bitcoin futures has grown over the past year, it is still not comparable to the volume of spot trading.
As a result of the emergence of bitcoin futures ETFs, the opposite effect is observed – an outflow of capitalization from the asset, the analyst says. He explained this by the fact that it is safer for institutionalists to invest in such exchange-traded funds, and not in bitcoin itself.
Investors are waiting
The launch of a spot ETF on bitcoin will certainly arouse more interest from investors and an influx of funds to the crypto market than the emergence of funds based on futures, says Artem Deev, head of the analytical department at AMarkets. According to his forecast, if this scenario is realized, bitcoin and altcoins will return to rapid growth.
“However, it is difficult to say now how quickly such a fund will be launched. The US authorities are currently more concerned about the issue of rising and expanding inflation, ”the analyst added.
There is a high likelihood that the spot Bitcoin ETF will launch in the US next year, Deev said. A leading analyst at 8848 Invest believes that it will take more time to launch a spot exchange-traded fund, about 2-3 years.
As part of the launch of the spot Bitcoin ETF, there are still many unresolved issues, Pershikov recalled. In his opinion, much will depend on the "purity" of the cryptocurrency at the base of the fund, since the bitcoins already mined are unlikely to be suitable for these purposes due to possible participation in illegal operations. Also, a lot will depend on the custodian (custodian of the cryptocurrency), said a leading analyst at 8848 Invest.
"In this regard, the launch of a spot bitcoin ETF is a technically and legally more complicated story," Pershikov emphasized.