The crypto industry had a record year in 2021, not only in terms of new investors and growing mainstream adoption, but also in terms of the launch of a wide range of investment products. This includes the highly anticipated launch of the first U.S. Bitcoin ETF after years of rally and provocation from digital asset enthusiasts.
Even when the ProShares Bitcoin Strategy ETF (BITO) opened to record numbers when it was launched in October of this year, a large portion of investors were disappointed that only one Bitcoin futures ETF was approved by the Securities and Exchange Commission. (SECOND).
The SEC’s reluctance to launch a spot BTC ETF, as evidenced by the frequent denials of such requests, has led many asset managers to move north towards a friendlier Canada, or even to withdraw their application altogether.
Matthew Hougan, CEO of leading crypto asset manager Bitwise, believes that while the introduction of BITO is an important moment for the ecosystem as it signals growth and will attract a lot of capital, it may not be the best product for avid investors is.
On a recent podcast, moderators noted,
“This is an imperfect product, nobody loves it. Great if you trade bitcoin for a week, not so great if you hold it for a year … it’s not a niche product … the narrative that this will be the product that makes this institutional wall money possible is one wrong story. ”
Interestingly, futures-linked ETFs that invest in contracts that speculate on the future price of BTC actually perform worse than Bitcoin, forcing anyone to question their intentions.
One of the limitations of futures ETFs is that they have no appeal to financial advisors, who control most of America’s wealth and “just wouldn’t buy cryptocurrencies over a phone app” for their clients.
Hougan further noted that while a BTC ETF would be a more viable option for this cult, “the futures product cannot be described as an optimal exposure to the asset”.
However, according to the CEO, investment products showed a sign of silver in the government’s past, as Congress mistrusted ETFs when they were first introduced as an investment product in 1993.
This could serve as a lesson for the current crypto market, Hougan said:
“It doesn’t have to be that the world is always so skeptical. Through continuous lobbying and facts and analysis, you can graduate into a future where it will be accepted as usual. “
The hearings in Congress that several crypto CEOs have been going through recently, as well as the government’s increased interest in the industry, can be seen as a positive step in this direction. A comprehensive bill on cryptocurrencies is likely to be proposed by Congressman Lummis early next year.
Emphasizing the same, concludes Hougan,
“I think the next bull market in crypto will be driven by positive regulatory developments and I think it will come sooner than people expect.”