A Bitcoin futures ETF may be a costly way to get long-term crypto exposure. Cost-conscious investors who want exposure to Bitcoin and other cryptocurrencies in their portfolios may be better off buying them outright instead of via futures ETFs. That is primarily the case for buy-and-hold investors, who would save money over the long term.
However, ETFs are tax-efficient. They stray from their intended index. That tracking error can be a cost to investors. Indexes do not hold cash, but ETFs do, so a certain amount of tracking error in an ETF is always expected, resulting in administrative expenses and management fees.
So, what’s the alternative? A new proposal for a short Bitcoin Futures ETF.
Short Bitcoin Futures ETFs
The proposal for a short Bitcoin Future ETF was submitted on October 26.
According to an article published in Bloomberg, if approved, the new Bitcoin ETF would bring ease to traders by enabling them to short bitcoin futures.
A new ETF will supposedly have its investors lose everything on betting against the future contracts of Bitcoin.
Direxion Want To Pitch Bitcoin Futures ETF For Short Sellers
According to Bloomberg, Direxion submitted and put out a documentary that explained why Direxion wants to launch the Bitcoin Strategy Bear ETF.
The BTC futures ETF industries are anticipated to reach a new milestone only if the US Securities and Exchange Commission approves the launch of the Bitcoin Strategy Bear ETF.
Bitcoin experienced major growth to almost $67,000 prompted by the debuts of Bitcoin futures products in the past week and reached a new peak.
Although there wasn’t enough time to celebrate the achievement because the coin cryptocurrency soon fell short and retreated to lower than $60,000. It was a mind-blowing drop, one that was not at all foreseen or expected, as half a million worth of crypto was liquidated in just 60 minutes. It was conducted across major exchanges like Binance, Huobi and Bitfinex, etc.
Bito ETF Spikes Up By Gaining $1 Billion In Just Two days
Becoming the second most traded asset right on the first day of trading on the NYSE, the ProShares Bitcoin ETF hit another record. BITO (the ticker that the ETF goes by), had received 10,100 buy orders and what’s more, seven times more selling orders were placed on it.
And within just two days of trading, BITO reached over $1 billion in asset value. That is equal to several net asset values of Canadian Bitcoin ETFs that have been trading for a while now.
Direxion Fund: Bearing Loads of Risks
The company warns about the risks of Direxion funds, stating that no matter how good the proposed documentation is, the new Bitcoin ETF by Direxion bears tons of risks for shorts-sellers.
There’s a huge potential risk of shorts-sellers wiping out by trading this ETF. According to Bloomberg, the massive fluctuations in Bitcoin’s price do not help make the situation favourable for shorts-sellers, rather, they add up the risks even further.
The SEC suggests that if an investor is not ready to lose all their money by investing in the respective ETF, then they should not bet on it in the first place.