Will a Bitcoin Futures ETF Impact the Crypto Market?

Some crypto fans have speculated that the launch of a bitcoin ETF might serve as a catalyst for another major bitcoin surge; however, other experts are unsure that a bitcoin ETF would increase demand. 

This is because bitcoin and other crypto assets are already available to many investors. Retail investors can access crypto via crypto exchanges or other financial platforms such as PayPal or Venmo. Institutional investors are able to gain crypto exposure through other vehicles such as the Grayscale Bitcoin Trust (GBTC). 

While a bitcoin ETF might inspire some more hesitant investors to consider adding crypto to their portfolios, the impact of a bitcoin ETF might not be huge considering that most investors are already able to gain crypto exposure through other products or by holding cryptos directly. 

Additionally, a bitcoin futures ETF, which might be the most likely type of bitcoin-linked product to be approved, may not be ideal for many investors. 

Senior Bloomberg ETF analyst Eric Balchunas said on Bloomberg’s “QuickTake Stock’’ program that “investors generally don’t like derivatives, and a lot of advisors don’t like derivatives.” Futures-backed ETFs have to roll their futures contracts, which “eats into” their performance. 

According to Balchunas, a bitcoin futures ETF would be “a very minor catalyst” whereas a physically-backed ETF would be “a major catalyst.” 

For the moment, though, bitcoin is soaring again, rising to almost $58,000 this week, its highest price since May. Bitcoin has had a rocky few months, falling below $30,000 in July and dropping under $45,000 at the end of September during concerns about China’s crypto crackdown and potential U.S. regulation. 

U.S. regulators have since confirmed they have no plans to ban crypto in the U.S. However, the future of regulation for crypto assets is still unclear.

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