This $ 20 trillion market is set to power crypto ETFs

As Bitcoin futures-based exchange traded funds (ETFs) from ProShares and Valkyrie Funds take the market by storm, ETF Trends CEO Tom Lydon believes they could be key to unlocking trillions of dollars.

With the recent adoption of the Bitcoin Futures ETF, the total capital of the ETF reached $ 1.24 billion. As of October 26, 2021, digital investment products had seen inflows of up to $ 1.47 billion, with the majority flowing into Bitcoin, followed by altcoins such as SOL, ADA, and BNB. follow opinion poll, the number of advisors who have assigned cryptocurrencies to their clients’ portfolios increased from 6.3% to 9.4%.

Trends like inflation have spawned the middle class, with financial advisors managing roughly $ 20 trillion, for which there is no optimal investment in non-crypto asset classes and where ETF futures can prevail. In a survey conducted earlier this year, up to 25% of advisors view Bitcoin as a hedge against inflation, 16% more than last year.

Simeon Hayman of ProShares believes that the plethora of regulations in the futures market, combined with the simplicity and structure of an ETF, will boost the investment of those looking to get into Bitcoin.

ETF Spot and futures 

The Chicago Mercantile Exchange (CME) and the Commodity Futures Trading Commission (CFTC) work together to prevent manipulation of the futures market. In the final commodities market, it is still the futures market that sets the price, not the spot market. Futures appear to have much greater liquidity and the CME market trades about 40% more volume than the largest US cash exchange.

The Valkyrie Bitcoin Strategy  is an actively managed product that combines the next expiring Bitcoin futures contract, government bonds, corporate bonds and cash. Valkyrie Funds Chief Investment Officer Steven McClurg believes a spot Bitcoin ETF will not be approved until mid-2022. The SEC must make a decision on May 14 to reject or approve Van Eck’s physical Bitcoin proposal.

Regulators are wary of riskier Bitcoin ETFs

On October 26, 2021, Valkyrie filed with the SEC to launch the Valkyrie XBTO Leveraged BTC Futures ETF, with the aim of generating 1.25 times the daily bitcoin returns by holding derivatives such as contracts, futures and options.

On the same day, Direxion, another asset manager, also filed the Direxion Bitcoin Strategy Bear ETF startup, which aims to offer short positions on Bitcoin futures contracts, meaning that if Bitcoin falls and loses money, investors benefit. when the price goes up.

According to the Wall Street Journal, the SEC has asked Valkyrie to withdraw its proposed leveraged bitcoin ETF as the agency wants to limit new bitcoin futures products to unlevered funds. Leveraged funds are designed for investors who want to take advantage of volatility, don’t need to buy and hold long-term investments, and are riskier products, while the SEC wants to protect buyers looking for long-term value.

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Minh Anh

According to Beincrypto

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