Spot-Based Bitcoin ETF: A Solution to Rising Costs for Futures ETFs
The recent rally in Bitcoin has brought attention to a market peculiarity that disadvantages traders of futures and futures-based exchange-traded funds (ETFs) compared to coin holders. The widening spread between prices for futures contracts has raised the cost of pre-expiry rollover, negatively impacting the performance of futures-based products. This has led to calls for the approval of a spot-based ETF, which would eliminate the need for rollover and allow investors to hold positions indefinitely.
Key Points:
- The spread between front-month and next-month futures contracts has widened, increasing the cost of rollover for futures-based ETFs.
- A spot-based ETF would be superior to futures-based ETFs, as it would eliminate rollover costs and allow investors to hold positions indefinitely.
- Spot-based ETFs have been filed by major players in traditional finance, and if approved, would track Bitcoin’s spot price more closely than futures-based ETFs.
- Futures-based ETFs have underperformed Bitcoin, with the largest futures-based ETF experiencing a loss of upside compared to the cryptocurrency.
- The rising cost of futures contracts and the widening spread between futures and spot prices emphasize the need for spot-based ETFs.
Hot Take:
The increasing costs of pre-expiry rollover for futures-based ETFs highlight the advantages of a spot-based Bitcoin ETF. By eliminating rollover costs and closely tracking the spot price of Bitcoin, a spot-based ETF would provide a better investment avenue for investors. As major players in traditional finance file spot-based ETF applications, the demand for such a product is clear. If approved, a spot-based ETF could revolutionize the way investors access and hold Bitcoin.
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