Bitcoin ETFs are coming closer with each day, but if futures ETFs are already here, what will change?
Bloomberg ETF analyst Eric Balchunas in his latest Tweeter, discussed the possible overestimation of crypto ETFs in the cryptocurrency community. This is based on the contribution that exchange-traded funds can potentially bring to the industry after being approved by the SEC.
According to data provided by Balchunas, current Bitcoin ETF futures only bring in $ 4 billion in the first 12 months, which is only 5% of the total number of assets under management by crypto funds. While physically backed ETFs would attract more investors, analysts expect futures funds to lose the majority of their participants.
By analogy with Canada, Balchunas expects cryptocurrency funds tied to Bitcoin futures, rather than the underlying assets, to lose the majority of funds once the ETF is physically backed at launch. Investors tend to use funds tied to actual assets rather than derivatives.
The main difference between Futures Backed and Physically Backed ETFs is that the latter actually have underlying assets. This means that by buying into physically-backed ETFs, investors actually buy into assets that are directly tied to the asset that removes tracking and counterparty risks.
While Bitcoin futures ETFs can always be a great addition to an investor’s portfolio, they have a number of drawbacks that keep some investors away. According to a Bloomberg analyst, he expects “hundreds of millions” to be poured into the market once the first Bitcoin ETF gets approved. At the same time, investors should keep in mind that while flash funding spikes may fuel the potential rise in Bitcoin prices, it would still only be a small part of an already growing industry. development.
