ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Crypto Channel
  2. How Do Bitcoin Futures Differ From Other Futures?
Crypto Channel
Share

How Do Bitcoin Futures Differ From Other Futures?

Ben HernandezJan 26, 2022
2022-01-26

Investors new to the cryptocurrency marketplace, especially bitcoin futures, might be reticent to express their reservations about the market’s differentiating features to the traditional commodity futures marketplace.

ETF provider ProShares, the progenitor of the first bitcoin futures fund in the U.S., the ProShares Bitcoin ETF (BITO ), dispelled myths regarding the leading cryptocurrency’s futures. Specifically, the company addressed how commodity futures and bitcoin futures do share some similarities.

That said, having a veil of regulation that governs the commodity markets applies to bitcoin futures. Conversely, bitcoin tokens by themselves can trade on unregulated exchanges, leaving investors prone to possible hacks.

“Bitcoin futures operate in the same manner as other commodity futures, which provides several key benefits,” Simeon Hyman, Global Investment Strategist at ProShares, said. “They are traded on futures exchanges that are highly regulated to ensure market integrity and protect against market manipulation and have price stabilization rules to guard against ‘flash crash’ events.”

“There are also no custody issues with futures contracts—cash bitcoin that is held in wallets can be hacked or become inaccessible,” Hyman added.

Maturing Faster Than Its Age

Despite BITO making its debut just last October in the U.S. markets, the bitcoin futures market is maturing quicker than its age reflects. As such, investors need not fret when contemplating whether the market is seasoned enough to withstand market disruptions like the current sell-off.

“Bitcoin futures are a relatively young financial instrument, however, and that might prompt some to ask what implications that may have,” Hyman explained. “As it turns out, bitcoin futures appear to be maturing quickly.”

One of the challenges with a fairly new market is a reflection of value, particularly when dealing with multiple exchanges that offer bitcoin. In order to collate prices and get the closest reflection of value, bitcoin futures can offer that type of price parity.

“There is evidence that bitcoin futures are the best reflection of value, more accurately reflecting market sentiment and resolving the price challenges of multiple bitcoin exchanges,” Hyman added.

One of the byproducts of the rise in popularity is the number of investors entering the marketplace. That, in effect, translates to more market liquidity, which also speaks to the rapidly maturing crypto market and the associated bitcoin futures market.

“The bitcoin futures market is also the most liquid venue to obtain bitcoin exposure—with average daily volume of front month CME bitcoin futures trading activity in 3Q21 was over 70% greater than the largest US bitcoin exchange (Coinbase),” Hyman said.

For more news, information, and strategy, visit the Crypto Channel.


Content continues below advertisement

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X