Who needs a bitcoin ETF, anyway? It may be of little value to investors now. Here’s why.

[ad_1]

Hi again! I am inundated. There is at least 3 inches of water in my basement in New Jersey. All thanks to what the media (hey, it’s me) refer to as the remnants of Hurricane Ida.

Anyway, wading through knee-deep water at 1 a.m. EST Thursday as I embarked on Sisyphus’s task of raising my basement hold to me. was reminiscent of the flood of ETF demands for bitcoin-backed products that Gary Genslers Securities and The Foreign Exchange Commission are floundering.

We spoke to Will Rhind from GraniteShares, who applied for a long and short bitcoin ETF in 2017, but is having a hard time this time around. I’ll leave it to you to judge whether Rhinds’ reasoning is correct. Rhind is the founder and CEO of ETF issuer GraniteShares in New York, which was established in 2016.

You know what to do: send any advice or comment, and find me on Twitter at @mdecambre to tell me what we need to jump on.

Register here for ETF Wrap.

Why do we need a bitcoin ETF

There is a growing increase in bitcoin ETF demands for a commodity based on futures contracts, after the SEC said it would likely approve a bitcoin BTCUSD, -0.04% ETF which holds bitcoin BTC futures. .1, + 2.79%, rather than the crypto itself. SEC Chairman Gensler sees futures as a more regulated area of ​​the market where he believes investor safeguards are stronger.

Futures are typically a bet on an underlying commodity such as CL.1 Oil, +1.73% or GC00 Gold, -0.24% and there is a growing Bitcoin futures market. managed by CME Group. CME, -0.80% Bitcoin futures trade separately from the underlying asset and values ​​do not always line up.

Rhind told ETF Wrap in a telephone interview on Wednesday that there may be no substantial interest in the current scheme of trying to be the first to offer a bitcoin-backed ETF beyond the optics of it.

In 2017, Rhind said the thesis for providing a bitcoin ETF was clear.

We felt bitcoin and the like [crypto] Currencies seemed like an asset that people wanted to trade and couldn’t easily, he said.

That dynamic has changed dramatically over the past three years, he claims, as access is easier for the average investor through platforms like Coinbase Global COIN, + 0.86% and others, such as PayPal PYPL, -0.43%, which offers bitcoin exposure.

The best expression of an ETF has always been market access, he said. It can be lightened up in a bottle when you combine a real need, a demand for a particular class, and [the ETF], meets this need and unleashes value.

But now it’s not about market access anymore, Rhind said. People can already access it.

The GraniteShares pro also said that the tax benefits one could get from a stock ETF would likely not be at stake for a bitcoin futures ETF.

Chances are, the tax treatment will be the same as if you directly own the underlying futures contracts, he said.

JohnHyland, CFA, and director of Matthews International, told ETF.com that the so-called rolling costs, as futures contracts expire, could also create idiosyncrasies in ETF prices and trading.

Bitcoin futures will likely always be in a moderate environment, much like gold futures, a small but unwelcome result, Hyland told ETF.com in an interview. Contango is a condition where prices are higher for longer term contracts.

So even though a bitcoin futures fund is small and can easily trade its futures, it will likely still underperform the spot price each year if it uses futures, Hyland told ETF.com in a report. interview.

It’s all worth thinking about amid all the hubbub surrounding a bitcoin ETF. Is it worth it, even if we are approved by October?

Some crypto purists also like to point out the paradox of owning a decentralized asset, like bitcoin or Ether ETHUSD, + 0.05%, on a centralized platform, like an exchange traded fund.

The Good and the Bad Top 5 Winners of Last Week% Return Global X Uranium ETF URA, + 6.40% 13.2 KraneShares CSI China Internet ETF KWEB, -1.21% 9.6 Emerging Markets Internet & Ecommerce ETF EMQQ, -0.96% 7.1 Global X MSCI China Consumer Discretionary ETF CHIQ, -1.19% 6.7 iShares MSCI China ETF MCHI, -0.70% 5.4 Source: FactSet, until Wednesday 1st September, excluding ETNs and leveraged products. Visual of the week Cboe Global Markets and FINRA

Data from Cboe Global Markets shows the memes stocks phenomenon that exploded earlier this year, amid rabid appetites for AMC Entertainment Holdings AMC, + 1.58% and GameStop Corp. GME, + 0.26%, has been around much longer. .

The Cboes team, including summer intern Jeff Nguyen, determined that the stock-meme phenomenon, characterized by actions that move on social mentions and a collaboration of ideas on social platforms, rather as fundamentals, has continued since at least 2019 (see attached chart). The group created a program that scanned Reddit’s popular r / WallStreetBets forum for tickers and totaled the number of mentions for each ticker per day.

We then looked at the 15 most discussed social media memes stocks from January 2019 to present, and the researchers compiled the total transaction volume of each stock against the total composite volume, or TCV, to determine if a significant trend was underway.

Let it flow

The exchange-traded funds sector has recorded $ 596 billion in net inflows since the start of the year through August, extending its record year, the CFRA said.

CFRA

Todd Rosenbluth, head of ETF and mutual fund research at CFRA, said extended market global equities and USETFs contributed the most to these flows in the first eight months of 2021, along with iShares Core MSCI Emerging MarketsETF IEMG, -0.52% and Vanguard S&P 500ETF VOO, + 0.30% among executives.

August performance

The right folks at Bespoke Investment Group have a helpful chart that gives an overview of how some US and international ETFs performed over the month.

Tailor-made investment group

The Nasdaq-100 QQQ, -0.05% had the best August of the major US index ETFs, while the Dow 30 DIA, + 0.37% was the least up. The XLE energy sector, + 2.54%, was the only sector in the red for the month, while all other ETF sectors gained more than 1%, the researchers wrote.

A good ETF reads Cathie Woods New Ark ETF has no room for banking, oil or sin. Ark Investment Managements Transparency ETF. The ETF will closely follow an index that excludes industries such as alcohol, banking, gambling, and oil and gas, report Forbes and Bloomberg. ETFs using hedging options made $ 5 billion last year. Simplify CEO’s Business Strategies: CNBC Don’t Ignore Bitcoin Futures Rollover Costs: ETF.com

[ad_2]