Page 17 - Investment Advisor - December 2021

Also in the recent mix: a filing by billion in assets in its first two days. compound over the long term,”
VanEck to trade a Bitcoin futures ETF Ben Johnson, director of global Johnson writes.
that would have lower fees (65 basis exchange-traded fund research at Another complication of the new
points) than the two Bitcoin futures that Morningstar, writes in a recent report Bitcoin futures contact is the limit
launched in October — the ProShares that Bitcoin futures ETFs “are a bad deal the CME has on the number of front-
Bitcoin Strategy ETF (BITO) and the for investors” and “a lousy option for month futures contracts any one
Valkyrie Bitcoin Strategy ETF (BTF) — long-term exposure to Bitcoin.” entity can own. The CME Group has
which charge 95 basis points. VanEck‘s Bitcoin futures don’t invest directly announced it will increase that limit
application for an ETF based on actual in Bitcoin and at current prices will to from 2,000 to 4,000 contracts as
Bitcoin was rejected by the SEC. cost investors who want to stick with the November contract moves into the
the investment. Because Bitcoin futures front month.
FILING FRENZY contracts expire monthly and the for- But there remains the possibility
Bitcoin futures filings are growing in ward months of the contracts cost more that Bitcoin futures ETFs may have
number despite the drop in Bitcoin than the current month — a pattern that to stop issuing new shares in order
prices, which had rallied in anticipa- has prevailed for several years — those to comply with CME limits. If that
tion of the Bitcoin futures ETF launch- investors will lose money when they roll happened, the contracts “could come
es, and the decline in the prices of over from the front-month contract to a unmoored from the value of their
those ETFs, now trading below their later month. assets,” Johnson writes. He concludes
initial launch prices even though the “The costs of regularly rolling that Bitcoin futures are best left to
ProShares ETF amassed more than $1 into higher-priced contracts will professional traders.

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DECEMBER 2021 INVESTMENT ADVISOR 15