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📺 Useful Vids 📺
What SEC Thinks 👉 https://www.youtube.com/watch?v=uPBR3mn6wKU&
Upcoming Market Risks 👉 https://www.youtube.com/watch?v=3cvUpAy_aXQ
ETF Update 👉 https://www.youtube.com/watch?v=o3-j0JTTJYE
– TIMESTAMPS –
2:39 ETF Overview
5:10 Bitcoin ETF Background
8:25 Gensler Said What?!
11:25 Why Futures ETF Suck!
14:48 Risks with Futures ETFs
17:46 Why The SEC Approves
⛓️ 🔗 Useful Links 🔗 ⛓️
Commoditiy Manipulation: https://www.ft.com/content/bdc8c9e8-3de1-11e2-93cb-00144feabdc0
Gensler Statments at Aspen: https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03
Outstanding ETFs: https://decrypt.co/62912/high-profile-bitcoin-etf-applications
ETF AuM: https://www.statista.com/statistics/224579/worldwide-etf-assets-under-management-since-1997/
Backwardation vs. Contango: https://www.investopedia.com/articles/07/contango_backwardation.asp
SEC Warning on Investing: https://www.sec.gov/news/public-statement/staff-statement-investing-bitcoin-futures-market
True Cost of Commodity ETFs: https://movement.capital/the-true-cost-of-commodity-etfs/
🤔 What is an ETF? 🤔
An ETF is a collective investment vehicle that, as the name suggests, can be traded on an exchange.
These are funds that are designed to track an asset, a basket of assets or an Index. These funds then issue shares that individual retail investors can buy and sell easily
ETFs have become incredibly popular given how easily people can purchase these shares. This can be done through a simple share trading account just like if they were purchasing the individual shares themselves.
📈 Bitcoin ETFs 📈
A fully regulated Bitcoin ETF would open the floodgate to millions more retail investors. It would allow these investors to easily gain exposure to Bitcoin through their brokerage accounts in a tax efficient way.
It would also allow some of those large institutional investors that were worried of storing actual Bitcoin another avenue to invest.
Previously, they had to rely on other fund structures to invest like closed-end funds etc.
🤔 Change in Tune 🤔
One of the most interesting statements that came out of the conference attended by Gary Gensler at the Aspen security conference is that the SEC is more likely to approve futures ETFs.
This was quite surprising especially given the fact that the SEC warned against Bitcoin futures investing earlier this year.
This caught a lot of the futures applicants off-guard and angered them.
👎 Why Future ETFs Suck 👎
When it comes to the futures backed ETFs, the fund issuer has to invest in underlying futures contracts in order to replicate the price of Bitcoin. This costs money especially as they have to constantly roll over the futures instruments to later dates.
Moreover, the CME futures markets are a lot less liquid than the spot market. It’s not only the costs of rolling these over but the fact that you could be getting suboptimal performance given that the fund creates demand for the futures on a roll.
Moreover, there are others in the market that may try and front run these orders. This means that the price is being bid up on each roll.
Futures also only trade during market hours whereas Bitcoin will trade 27/4 365. This means that there is a situation in market gaps. Moreover, you have the risk in highly volatile trading that the CME halts trading when Bitcoin itself is still actively trading.
😏 Why The SEC Likes It 😏
The SEC claims that the spot market is unregulated and that they have more oversight in the futures market. They are worried about “manipulation”.
This is asinine as there is so much manipulation going on in the futures market. You also have to consider the fact that the spot market will impact on the futures market.
There are other theories as to why the SEC is keen on these instruments and that is because of the money that can be made on Wall Street structuring them. It is well known that the SEC is friendly to wall street.
📜 Disclaimer 📜
The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.
#Bitcoin #ETF #futures #Crypto #CME #SEC