With the advancement of blockchain in finance, cryptocurrencies have paved their way to the world of finance quite easily, and now is one of the most discussed topics of financial analytics.
The most popular cryptocurrency to be used and discussed is Bitcoin, as it is the largest cryptocurrency available in the market by market capitalization.
Anyone interested in financial exchanges already has an idea about Exchange-Traded Funds (ETFs). Exchange-traded funds are regulated financial instruments that can hold a variety of assets.
The potential of an ETF that follows bitcoin is the biggest chance for this sort of link for cryptocurrency fans and investors wanting to profit on the rising popularity of exchange-traded funds (ETFs).
Investors can buy and sell ETF shares in the same way they would equities. But, ETF shares can be purchased and sold at any time during market trading hours, unlike mutual funds.
(Related read: 14 Types of Trading)
In this article, we will discuss everything about the Bitcoin Futures ETF including its definition, working, its approval, and the risks that come along with it.
But, before we understand what Bitcoin Futures ETF is, it is important to clear out this given question:
Bitcoin futures are a form of derivative trading contract in which two parties agree to purchase or sell bitcoin at a predetermined price at a future date, usually on a currency market.
So, the actual market price of bitcoin at the time of buying or selling does not play a huge role in this exchange, and the contract settlement date or the expiry date is the agreed-upon date by which both parties must satisfy their commitments. Although, there remains some dependency on the market price.
When a bitcoin futures contract expires, whoever committed to acquire bitcoin must do so at a premium or a discount, since it's extremely improbable that bitcoin would be the same price when the contract expires as it was when it was negotiated. The amount that individuals must pay is determined by the current market price (commonly known as the spot price) and the value of each futures contract in their possession.
There are few things to note about bitcoin futures since it is a contract that is signed by two sides if one side is experiencing profit, the other is bound to incur a loss. Contracts for futures always have an expiration date. Investors can opt to sell their contracts before they expire to another party or wait until they expire to settle them. Based on the current settlement of futures traders, the prices of bitcoin futures and the market price of bitcoin tend to differ.
If more individuals are betting on bitcoin's price rising, the contract's value will naturally be higher than bitcoin's current market price. When more traders predict that the price of bitcoin will decline in the future, the situation is the inverse.
As the expiration date of contracts approaches, the values of bitcoin futures contracts and bitcoin on spot markets tend to converge.
(Also read: Difference between Bitcoin and Bitcoin Cash)
According to coindesk, a bitcoin futures ETF is an exchange-traded fund that allows investors to acquire exposure to bitcoin values without actually purchasing the cryptocurrency. An exchange-traded fund (ETF) follows the price of an underlying asset. And, in the case of a bitcoin ETF, the investment instrument's underlying asset is bitcoin.
Because investors might hypothetically arbitrage away the spread between the ETF and the underlying asset if it were too wide, the price of an ETF will generally retain a high correlation with the price movement of the underlying asset.
Similarly, tying the price of a bitcoin ETF to a bitcoin hoard is a common strategy. All the business needs to do now is make sure it has enough bitcoin on hand to back up the value of its bitcoin ETF.
Although this is a very common and effective method, the notion of a physically-backed bitcoin ETF has been met with skepticism by the Securities and Exchange Commission in the United States. The decision was based on the fact that bitcoin is traded on mostly unregulated exchanges, making it vulnerable to fraud and manipulation.
As per ETF Trends, the VanEck SolidX Bitcoin Trust ETF was introduced earlier this year by VanEck and SolidX, a fintech business with bitcoin-related initiatives. This ETF would be aimed at institutional investors, with a share price of $200,000 at the start.
XBTC is a cryptocurrency that is used to track an index that is linked to a group of bitcoin trading desks. 5 The assumption is that by broadening the scope of the ETF's emphasis, XBTC will be able to address the SEC's concerns about funds connected to bitcoin.
(Related read: What is FinTech?)
Bitcoin ETFs are backed by actual bitcoin, whereas bitcoin futures ETFs are backed by bitcoin derivatives (futures contracts).
Due to market sentiment, the price of bitcoin futures may differ from the current price of bitcoin, therefore bitcoin futures ETFs may occasionally follow the price of bitcoin incorrectly.
Because the ETF is backed by actual bitcoin, there is no risk of price divergence in the case of a bitcoin ETF.
As we know by now, an exchange-traded fund (ETF) is a type of investment instrument that follows the performance of a certain asset or group of assets. ETFs allow investors to diversify their portfolios without having to hold the assets. ETFs are a simpler option to buying and selling individual assets for those who want to focus just on profits and losses.
Traditional ETFs allow investors to readily diversify their holdings since they target larger baskets of names with something in common—for example, a focus on sustainability or equities representing the video game industry and associated industries.
A bitcoin ETF is a fund that tracks the price of the world's most popular digital currency. This allows investors to invest in the ETF without having to go through the time-consuming process of trading bitcoin.
Furthermore, because the ETF would not be directly invested in bitcoin, holders will not have to worry about the complicated storage and security protocols that cryptocurrency investors must follow. With bitcoin future ETF, the price mimicked is that of bitcoin futures, and not the actual bitcoins.
The ETF's value is derived, in essence, from the price fluctuations of bitcoin futures. In this case, the ETF's issuer must have holdings in the bitcoin futures market and tie the ETF's price to those bitcoin futures contracts. So, it is better to invest in Bitcoin Futures ETF as it is safer and more predictable.
(Also read: Bitcoin mining)
The following are the downsides of Bitcoin futures ETF:
The price trackers can also act as one of the biggest risks of the Bitcoin Futures ETF, as all the ETFs are dependent on the accuracy of these price trackers. When the price of bitcoin futures is greater than the spot price, we may claim the ETF is following the price of bitcoin incorrectly.
This is referred to as "contango," and it is harmful to investors who hold bitcoin futures ETFs. Backwardation, on the other hand, happens when the futures price is lower than the current price of bitcoin.
When the bitcoin futures contracts expire, the business issuing the bitcoin futures ETF must roll them over (that is, the process of renewing contracts by selling the almost expired ones and using the revenue to purchase new contracts with a farther expiration date).
When the price of a bitcoin futures contract is lower than the price of a new contract, the money from selling contracts that are about to expire will not be enough to buy the same number of contracts that will expire later. The ETF's performance will be harmed as a result of this scenario.
(Must click: Top Companies Adopting Bitcoins)
Although the risks are something that might make someone hesitate before investing in Bitcoin futures, as a bitcoin futures ETF is another form of regulated financial product that allows investors to indirectly engage in the bitcoin market.
The emergence of bitcoin ETFs and bitcoin futures ETFs might assist to accelerate bitcoin increases, as well as gains across the cryptocurrency market because many other digital currencies are closely connected to bitcoin's performance.
(Must Read: What is the Future of Cryptocurrency?)
In this article, we have briefly discussed bitcoin futures and bitcoin futures ETF, the difference between bitcoin ETF and bitcoin futures ETF, and the risks that come along with bitcoin future ETF.
5 Factors Influencing Consumer Behavior
READ MOREElasticity of Demand and its Types
READ MOREAn Overview of Descriptive Analysis
READ MOREWhat is PESTLE Analysis? Everything you need to know about it
READ MOREWhat is Managerial Economics? Definition, Types, Nature, Principles, and Scope
READ MORE5 Factors Affecting the Price Elasticity of Demand (PED)
READ MORE6 Major Branches of Artificial Intelligence (AI)
READ MOREScope of Managerial Economics
READ MOREDijkstra’s Algorithm: The Shortest Path Algorithm
READ MOREDifferent Types of Research Methods
READ MORE
Latest Comments
wilmaadamsson3fdc513faf5c74ed3
Aug 14, 2024I was the subject of a cryptocurrency heist. My wallet was broken into, and some bitcoin was taken and transferred to an unauthorised account. They notified my wallet management, but they had me wait a week to get back to me by email. Instead of helping, they suggested that my phone might have been compromised and advised me to contact the authorities, who were unable to give any aid in getting my bitcoin back. While searching the internet for a way to recover my stolen bitcoin, I came across WIZARD JAMES RECOVERY, a group of knowledgeable bitcoin recoveries. I made the decision to get in touch with them to ask for help recovering the money I had stolen. Because WIZARD JAMES RECOVERY helped me get the money back that had been taken, I have nothing but respect for them. WIZARD JAMES RECOVERY was able to ascertain the transaction's execution with the usage of their advanced equipment. Thank you so much to WIZARD JAMES RECOVERY for your wonderful service. I have my money back. Should you have any questions about mine? Please send them a message through the following details: wizardjamesrecovery (@) usa.com or visit their webpage for more info: www . WizardJamesRecovery .com
rodrigosilva444344362116f259848df
Aug 17, 2024The fact that it is nearly hard to recover a stolen or lost cryptocurrency coin hurts more than anything else when someone loses their cryptocurrency, which may be a sad event. All that crosses a person's mind when they are defrauded of their money when investing on a cryptocurrency platform is how to report the company and recover their losses. After contacting their bank, wallet account provider, law enforcement, or other parties, the majority of scam victims never receive their money back. A small number of them even hire a lawyer to file a lawsuit against the company. Kindly advise everyone to use caution when making financial investments. In addition to making many wealthy, cryptocurrency has left a great number of people bankrupt and in need. I was recommended to Wizard James Recovery a few weeks ago, and with their help, I was able to recover every USDT currency that had been stolen. Wizard James Recovery is a dependable and trustworthy company to consider if you want to recover your lost or stolen cryptocurrency. Also, you can get in touch with them via wizardjamesrecovery@ usa .com. My best wishes are with you. They rank among the top recovery businesses worldwide.
chachabegay9731abfb43b74cbf
Aug 21, 2024WIZARD JAMES CRYPTOCURRENCY RECOVERY FIRM I want to extend my gratitude to WIZARD JAMES RECOVERY, who not only helped me find my missing cryptocurrency but also put me on the path of learning about cyber security. Like me, have you been duped by cryptocurrency scams, online romance scams, or investment scams? via making cryptocurrency investments or by giving money to fraudulent artists directly? This is the ideal location for you to be. The team at WIZARD JAMES RECOVERY assisted me after I lost $395,700 USD to a cryptocurrency investment scam. They are the most knowledgeable and effective Cryptocurrency Recovery Solutions providers. I wasted my time and money after calling other recovery agencies for assistance, only to have them all fail to help me, WIZARD JAMES RECOVERY provided me with excellent assistance. They requested that I provide proof of conversation and payment with the Scammers. I got help recovering all I had invested with these scammers after a frivolous battle with them because these scammers did everything possible to stop the efforts of WIZARD JAMES from recovering my stolen money, they assured me that my funds would be recovered and they delivered their promise. We are really grateful to Wizard James Recovery for his professionalism and ease of use. If you need assistance finding your misplaced cryptocurrency, get in touch with them. They do their jobs quickly and effectively. Send them an email using the details below. wizardjamesrecovery @ usa .com wizardjamesrecovery. com
adrieljones5554925285bab3564cb7
Aug 22, 2024Are you in need of assistance locating misplaced or pilfered cryptocurrency from fraudulent investment sites or forex brokers? Get in touch with wizardjamesrecovery[at]usa.com for exceptional assistance. When I was involved in an online investment platform, I invested over $123,423 via USDT. I was happy to see the profit I imagined that I got in less than a month of investment. I tried to withdraw the profit from my trading wallet, but unfortunately, the request for $8,000 as withdrawal fee came up. I informed them that I didn't have the money to pay for it, and they instantly blocked me from using my platform. This prompted me to look for a hacker who could assist me get my money back. Only a small number of skilled hackers are capable of using certain hacking techniques and knowledge to recover lost Bitcoin or USDT. Although there are a lot of recovery websites available, you should exercise caution because 70 percent of them are run by con artists that pose as trustworthy. I asked Wizard James Recovery To find the people who stole the money and created the fake site, and their team carried out a comprehensive investigation. They tracked the stolen money using cutting-edge technology and cybersecurity know-how. They put forth endless effort to get back every penny that was taken from me. Throughout the process, their staff provided me with regular updates on their progress and kept me informed. You can contact WIZARD JAMES RECOVERY for assistance if you're attempting to recover your pilfered funds.
doliyazziee2cb662db6d14db0
Aug 25, 2024Being naturally sceptical, I never thought that money lost to con artists and their Ponzi schemes could really be found and recovered. I cried out to the Capitalix organisation to stick to our original conditions and give me my money back, but they refused. They like to claim that I have to pay a fee each time I try to withdraw my money, but I believe it's just a ruse to keep me from getting the money they want by telling me new lies and taking advantage of my desperation until they wear me out. Things moved quickly as soon as I involved WIZARD JAMES RECOVERY. Compared to what I experienced when I attempted to handle the Capitalix group on my own, it was like night and day. Engage the experts; the risk is worthwhile. These are the greatest dudes ever. It is impossible for you to fight fraudulent investment cases like this because of our lack of expertise in this field. Even if you are correct, if you refuse to pay, they will hang your assets and destroy your financial future. Furthermore, nobody is interested in "why" it was ruined—they only want to hear your tale and then point the finger at you for making an effort to change your life. What then do you do? The irony is in the fact that you continue to provide money to the scammers even if you don't agree with the accusations in order for them to release your money—you never get compensated, you just end up ruining yourself further. After battling this problem for over a year, I finally told myself the truth—that I had been duped—and reported my case to WIZARD JAMES RECOVERY in hopes that they would step in and assist me in regaining possession of my belongings before it was too late. My money moved from being pending to being available in my Coinbase wallet in less than 72 hours after the recovery process was started and quickly completed. Total turnaround. Wizard James rectified in 72 hours what took me a year of work and still had no resolution. I've been beating myself up for not asking for assistance sooner, but I just didn't think it was possible. However they did. Reach out to them today on any of their available support channels to get help, EMAIL ADDRESS: WIZARDJAMESRECOVERY @ USA . COM WHATSAPP: (+44) (7418) (367204) WEBPAGE: htt ps : // ww w. wizardjamesrecovery . com
willylandgraf413e0f83ff6f5c4d12
Aug 29, 2024Watch out for the landmines in the cryptocurrency realm, as I was deceived by a cunning fraudulent artist. But Wizard James Recovery appeared as a ray of hope precisely when I had given up hope. The chains that imprisoned my Bitcoin were broken by their unparalleled expertise and unwavering perseverance. Don't let your hard-earned riches escape your grasp. Make use of Wizard James Recovery's experience to help you regain confidence in the cryptocurrency world. Email: wizardjamesrecovery @ usa. com
katewinslet555435e5af6e4e39436e
Aug 31, 2024Early in March, I was introduced to WIZARD JAMES RECOVERY by Mrs. Bradwil. We met at a very low time for me. I was surviving a loss of $470,000 worth of BTC. I felt like I was going to lose everything every day because I had sold my shares to get this money, only to have it all stolen. After she lost access to her wallet, she suggested this guy: wizardjamesrecovery(@)usa(.)com. He had assisted her in recovering her wallet password. I knew I had made the proper decision as soon as I reached out to this Wizard. I received a response right away. My funds were totally deposited into my account in less than 4 days. I owe this Wizard so much. He is beyond measure knowledgeable. Please go find him if you find yourself in a similar circumstance.
kaijackson77y9176f318a0574f76
Sep 01, 2024It can be quite difficult to navigate the aftermath of a large financial loss. My name is Kai Jackson, and I was recently put in a difficult situation when my girlfriend tried to access my bitcoin wallet without authorization. She even tried to delete the wallet and change the PIN in a desperate attempt to lock me out. Luckily, I had predicted her moves and had changed the PIN in time to prevent her from taking the $510,000 worth of Bitcoin assets that were kept inside. I was so scared and exposed that I went to WIZARD JAMES RECOVERY, a friend's recommendation, for help. From the beginning, their group offered outstanding assistance and confidence. They listened to my narrative with sympathetic ears and promised me that they have the know-how to get my money back. The experts at WIZARD JAMES RECOVERY started a thorough investigation and painstakingly tracked down the attempt at unauthorised entry and the wallet's subsequent erasure. They were desperate to recover what was properly mine, and their technological prowess was on display as they dug deep into the intricacies of digital transactions. In just a few weeks, they recovered the complete wallet in an amazing feat of expertise and perseverance. There was an unbelievable wave of relief and gratitude that passed over me. Furthermore, WIZARD JAMES RECOVERY gave me priceless advice on bolstering my digital assets' security to stave off future intrusions. Their steadfast dedication to their work and their kind assistance were sorely needed during this difficult period. What should have been a disastrous event was turned into a story of resiliency and healing by them. I highly recommend their services to anyone facing comparable difficulties. They are the real protectors of online safety, able to guide you through difficulties and help you come out stronger on the other side. Email: WIZARDJAMESRECOVERY@USA.COM
agisabernerd3aa0f4c9776e4cfb
Sep 02, 2024Seeing your digital fortune vanish when you lose cryptocurrency could be a little depressing. Because cryptocurrencies are dispersed, it can be extremely difficult for victims to recover, leaving them feeling helpless and vulnerable. However, firms such as Wizard James Recovery services emerge in the midst of this despair, offering people who are searching for their missing nickel a glimmer of hope. Wizard James Recovery Service adopts an open and thorough strategy, in contrast to certain other recovery services that work using obscure techniques. They use a mix of tactics to increase the likelihood of finding misplaced cryptocurrency: Wizard James Recovery Service is cognisant of both the financial difficulties and the psychological distress that accompany bitcoin loss. Their staff takes a client-centric posture, offering guidance and support continuously throughout the recovery process. They offer consumers emotional support, respond to enquiries, and give progress reports during this trying time. Wizard James Recovery Service has a successful track record, but because cryptocurrency recovery is so complicated, it is hard to offer assurances. Numerous gratifying client testimonials confirm their effectiveness in recovering lost or stolen funds. These success stories offer hope and motivation to those in similar situations. It's critical to keep in mind that cryptocurrency recovery is still a very new and unregulated industry. Even if Wizard James Recovery Service seems like a good choice, research is important before using any service. Examine their track record, approach, and success rates with great care. To obtain more knowledge and make well-informed judgements, think about speaking with financial advisors or legal experts. Wizard James Recovery is finally a glimmer of hope for people navigating the treacherous waters of missing cryptocurrency. Their varied approach and commitment to transparency and customer service make them a good solution for anyone seeking to retrieve their digital assets. But always remember to use prudence, complete your homework, and prioritise protecting yourself from more losses. Speak with Wizard James right now at: wizardjamesrecovery@ usa.com or whatsApp/call: .+.4.4 7.41.8 3.67.2.04
bidziillopez745502d2f0304e98
Sep 05, 2024It is possible to retrieve your digital and crypto assets with Wizard James Recovery Firm... Wizard James Recovery provides a top-notch asset recovery and mobile phone monitoring service. The most recent ruse employed by numerous fraudulent cryptocurrency investment thieves is the new AI technology. Just last week, I received a call from someone posing as a close friend who introduced me to this investment scheme, and that's when I fell for this scam. I chose to invest even though I had no idea I would be duped since he described her as being just like her and how she had been profiting from the venture. My inheritance and money obtained from several loan brokers on this Chinese investment site were lost, totalling roughly 323,000 USDT. Days after I lost these enormous sums of money, I looked far and wide for assistance, and I came across Wizard James Recovery Company, to whom I explained my predicament. When I opened a case with this team, they promised to get back to me right away. I was shocked to learn that they were able to recover the first installment of my stolen money and the rest amounts once I contacted them a few days later. Their services were hassle-free, flawless, and flawless. I'm relieved that I was saved, and I strongly advise you to contact this company for any asset recovery needs. Additional services include phone surveillance, tax evasion, catching a cheating spouse, improving results, raising credit scores, and eliminating bad debts, among others. For more information contact his team via mail: wizardjamesrecovery(@)usa.com