Bitcoin Futures ETF Trades on NYSE. Should You Buy? Jodie Gunzberg Says it is Horrible for Investors

There has been a lot of discussion about the first Bitcoin ETF to trade on a US-based exchange. ProShares Bitcoin Strategy ETF (NYSE:BITO) commenced trading today and currently is trading slightly higher.

But there has been a fair amount of criticism regarding this ETF because it is futures-based and not based on the spot price of Bitcoin and thus a bit more complicated than buying a Fund that holds BTC.

Bitcoin futures have traded on the CBOE and CME for some time now providing a hedging mechanism for investors as well as an opportunity to speculate on price direction.

Managing Director at CoinDesk Indexes, Jodie Gunzberg, thinks this Bitcoin ETF is “horrible for investors:”

“Many will think they are getting Bitcoin, but they are NOT. The problem is they are getting futures, which are contracts that expire, so, to stay invested, investors need to sell expiring contracts for later-dated ones. If the price of Bitcoin is expected to rise in the future, then the later-dated contracts are more expensive. When investors sell the cheaper expiring contracts for the more expensive ones, they lose money,” said Gunzberg in an email.

She said that while she believes Bitcoin will rise going forward it will not be because of futures ETF buying:

“Futures prices are based on the spot price, NOT the other way around, so in terms of Bitcoin and crypto adoption, this is an advancement, which can drive demand. But Futures prices don’t drive spot.”

While more products are great, Gunzber says she does not see the point in buying a futures-based Bitcoin ETF when you can buy the asset in the spot market.

“It’s not like oil or cattle that is impossible to hold physically for most investors. It’s more like gold that can be easily held. Except the cost is more like oil.”

 


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