First US bitcoin ETF approaches the limit for futures-contracts days after the introduction
First US bitcoin ETF approaches the limit for futures-contracts days after the introduction
The Proshares Bitcoin Strategy ETF (Ticker Bito) proves to be more popular than he can process. The fund is already approaching its limit for the number of futures contracts that the Chicago Mercantile Exchange (CME) allows him.
on the popularity of ProShares ETF
In the meantime, Proshares also has 1,400 futures contracts for November to avoid exceeding the limits. However, the CME has also set an absolute limit of 5,000 on the simultaneously to be stopped. In view of the fact that Bito has accumulated far more than half of it within three days of its introduction, it will probably reach this threshold soon.
Bito - the first US Bitcoin Futures ETF - had the second most successful opening day in the history of NYSE. Es traded $ 500 million within the first hour after the start and almost $ 1 billion during the day. This was only topped by a Blackrock Carbon Fund, which was only traded higher due to pre-seed investments.
If Bito continues to distribute its stocks to long-term contracts, it risks to distance the futures prices from the actual price of Bitcoin.
Nate Geraci - President of the advisory company "The Etf Store" - repeated this idea.
"The end result is that the ETF will assume a potentially significant tracking error compared to Bitcoin's cash price. The ETF is forced to enter Bitcoin prices at ever higher prices, as it goes further out on the Futures curve."
Disadvantages of Futures-ETFS
Most agree that the approval of the Bitcoin futures ETF of the SEC was a critical regulatory development for the cryptocurrency. However, many consider a futures ETF to be a suboptimal investor solution compared to a spot-based.
In addition to the errors in price tracking, futures ETFs are associated with a number of administrative fees that deprive investors' profits. From comparison are practically free of these disadvantages.
The Sec chairman Gary Gensler is, however, clear to be more open to futures-based ETFs. These are regulated by the Chicago Mercantile Exchange, which offers investor protection that he loves.
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