4 Reasons Not to Invest in Bitcoin Futures ETFs

There are better ways to participate in the bitcoin movement. Read the full article by: Mark Jeftovic

Key Points:

• This month we have seen a couple of companies on the stock market release the first ever cryptocurrency based ETFs that are pegged to the futures contracts of BTC. The three that launched came from ProShares, Valkyrie, and the VanEck.

• While this is still a landmark accomplishment for crypto it may not be the best way to participate or get exposure to Bitcoin.

• One of the issues is the counterparty risk which we saw in the case of the housing market in 2008. Counterparty risk is simply the probability that one party will default on their part of the deal.

• Based on SEC rules these ETFs will only mimic exposure up to 85% of the net asset value and the other 15% in things like treasury bills.

• Since these are futures contracts and they expire at the end of a given period and are rolled over to the next. This means that it will accrue transaction costs from opening and closing new positions as well as fund fees.

• The last issue with the futures pegged ETF is that you are more-or-less just betting on the future price of the asset and not so much the asset itself as it currently stands.