Bitcoin futures predictions: When will next ETFs hit the US?
Six more bitcoin futures applications await approval, making crypto ETFs more mainstream
The first two bitcoin futures launched lin mid-October and were met with huge demand. ProShares’ bitcoin ETF is already nearing its limit of allowed contracts.
However, the bitcoin futures market is about to get a lot more competitive, as half a dozen more applications are waiting to be approved by the US Securities and Exchange Commission (SEC).
What are bitcoin futures?
A futures contract is an agreement to carry out a transaction in the future at a set price that is agreed beforehand. If the value of the asset goes up after the contract is agreed, then the person buying it will make a profit. However, the opposite occurs if there is a fall in the market price: the buyer loses money.
Bitcoin futures are being traded using exchange traded funds (ETF), an instrument that tracks an asset and allows it to be traded on the stock exchange in the same way a regular stock can be bought.
Last week ProShares Bitcoin Strategy gained approval from the SEC and launched the first ETF for bitcoin futures. It was an immediate success, reaching $1bn in trading volume within the first day.
ProShares was closely followed by Valkyrie Investments’ Bitcoin Fund (BTF), which launched on Nasdaq days later. Both ETFs charge a bitcoin futures price fee of 95 basis points (bp). Experts’ bitcoin futures predictions say that the competition will be focused on this fee.
How many more are on the way?
Just days after the launch of Valkyrie Investments’ ETF, the company made bitcoin futures news again. It filed for an ETF that would offer leveraged bitcoin futures with 1.25 times exposure, according to Bloomberg analyst Eric Balchunas.
The fund manager VanEck has filed a request with the SEC to launch its bitcoin futures ETF “as soon as practicable”. It plans on undercutting Valkyrie Investments and Proshares with a bitcoin futures price fee of 65bp. Bitcoin futures predictions from experts say that a significant fee difference could see investors switch.
VanEck was one of the first to apply for a bitcoin ETF in 2017 but withdrew the application. It filed again in December 2020 after the resignation of SEC chair Jay Clayton, who had been against the prospect of a bitcoin ETF. It is not clear when the ETF will be listed, but the community expected a launch on Monday 25 October.
The New York Digital Investment Group and Stone Ridge have filed an application for a joint ETF. It was the second bitcoin ETF application after Clayton’s resignation. The fund will be primarily investing in bitcoin futures. However, the investment strategy will also use pooled investment vehicles that invest directly and indirectly in bitcoin.
What is your sentiment on BTC/USD?
WisdomTree is no stranger to bitcoin futures investing and launched an ETF on Switzerland’s stock exchange in 2019. The New York-based asset manager has filed an application for a bitcoin futures ETF in the US, with the decision is expected this autumn.
Galaxy Digital, a capital market company, filed an application in April for a bitcoin ETF. It is expected to invest only in futures, and not directly in the cryptocurrency itself. The company also revealed a partnership with Invesco to create a suite of crypto products.
There was an application from Invesco for its own bitcoin futures ETF. However the company subsequently withdrew it. Instead, it is partnering with Galaxy Digital and planning on launching an ETF that holds digital items rather than futures.
One of the more recent applications comes from the asset management company Ark Invest. The firm filed a bitcoin futures ETF application earlier in October. Ark Invest listed 21Shares as the investment sub-advisor and the ETF will carry the ticker ARKA. As it was one of the later applications, there is uncertainty when the ETF will launch.
After the positive reaction from the first bitcoin futures, experts predict ether equivalents will be approved sooner than expected. Trey Griggs, US chief executive of the crypto trading firm GSR, told Markets Insider that it will not take as long for ether futures to get approved by the SEC as they are an almost identical product. He said one could launch by the end of this year.
ProShares and VanEck filed applications to the SEC for an ether futures ETF earlier this year and both withdrew them on 24 August. It is unclear why both asset managers removed their ETF applications. However, after the successful bitcoin launch, it is well within reach for a second application to be filed.
WisdomTree has filed an ether futures application, which has not been removed or approved yet. The ETF plans to launch on the Cboe BZX Exchange, the same as its bitcoin counterpart.
Although ether futures may be on the way, experts forecast it could be a while before altcoins futures hit the markets. Solana, cardano, and polkadot have the same blockchain technology as ether and are in the top ten cryptocurrencies by market capitalisation. For these reasons, experts say it may not happen soon, but the idea of altcoin futures is plausible.
Do bitcoin futures affect the price of bitcoin?
Bitcoin’s price reached a new all-time high last week as the first futures saw a successful launch. Markets Insider reported that when an ether futures launch, it is very possible that the same bullish trend could occur. Remember, always do your research before investing as prices can go up as well as down.
Is bitcoin futures good or bad?
It depends. Bitcoin futures offers a new method to trade the cryptocurrency. The contracts set a price for future trades, which can see investors make money if the price of bitcoin goes up. But investors can lose money if the price falls. Remember, never invest more money than you can afford to lose.
Where to trade BTC futures
Currently, there are two ETFs in the US that offer bitcoin futures, which are ProShares and Valkyrie Investments. However, many more are on the way as six ETF applications are waiting for approval.