Another Bitcoin ETF application has been filed with the US Securities and Exchange Commission. Cryptocurrency investment firm Bitwise has applied for a joint Bitcoin exchange-traded fund (ETF) with NYSE Arca.
In the information provided by Matt Hougan, the company’s director of investments, it was stated that the ETF is a fund directly indexed to the Bitcoin price, not futures contracts.
“The real Bitcoin ETF is better”
Hougan shared his comments on this in a series of tweets, announcing that NYSE Arca has applied to the SEC for the Bitwise Bitcoin ETF:
“Today, NYSE Arca applied for the Bitwise Bitcoin ETF. This is an ETF that will hold BTC directly, not based on futures contracts. Bitwise already has a separate futures contract ETF application, but the actual BTC ETF is much better.
And we think it’s finally possible. We also shared a 100-page analysis article on this subject.
First, let’s talk about why an ETF based directly on the Bitcoin price is better.
A) Expenses: Operating futures can cost more than 5-10% per year. There is 1-2% extra cost in fees.
B) Infrequent Bitcoin holding: ETFs cannot hold 100% Bitcoin futures due to rules. The highest rate is 85%. The remaining 15% becomes other assets. These may even include bonds.
C)Risk: Do you remember USO in 2020? Position limits and liquidity… Events may progress in the negative direction.
Bottom line: An ETF based on futures contracts costs between 6% and 12%, with around 15% Bitcoin sparsity and other risks. It may be useful for some investors, but it is not ideal.
A direct Bitcoin ETF eliminates all these problems.”
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