Weekly Crypto Update: lawsuits and infrastructure Weekly Crypto Update: lawsuits and infrastructure Weekly Crypto Update: lawsuits and infrastructure

Suddenly, the Bitcoin futures ETF out of nowhere

Cryptocurrencies 5 minutes to read
Mads Eberhardt

Cryptocurrency Analyst

Summary:  This week there is one news item to rule them all, namely the highly anticipated first Bitcoin futures ETF set to start trading in the US. We walk you through why the surprise new ETF is important, while possibly also meaning hardly anything for the market.

A Bitcoin futures ETF is set to list in the US

For years the Bitcoin community has speculated on when a Bitcoin ETF would list in the US. The ETF has been highly anticipated for several reasons, mainly that it lets investors in the US get exposure to Bitcoin through their regular brokerage account based on a regulatory framework without the hassle of storing Bitcoin themselves. Comparing ETFs with ETPs, which are tradable in multiple regions across the world, ETFs are often able to offer a more competitive management fee than cryptocurrency ETPs, while reducing the risk for investors in the event the issuer defaults.

As the US serves as the single most influential cryptocurrency market presently, the ETF listing there has been highly anticipated, with multiple issuers seeking approval for an ETF over the years. Up until now, every proposal has been turned down by the SEC. But with multiple ETFs approved in Canada, and US-listed stock MicroStrategy to some extent acting as a kind of ETF due to their considerable treasury of 114,000 Bitcoins, the SEC has been put under greater pressure to let an ETF list.

On Thursday last week, believable rumors started circulating that the SEC would not block a proposed Bitcoin futures ETF from ProShares that would begin trading this week. On Friday after the stock market closed, the rumor was confirmed as the futures ETF was listed on SEC’s website to start trading tomorrow on the New York Stock Exchange, provided no last-minute complaint arises from the SEC. The futures ETF did not receive formal approval from the SEC but will simply start trading as the rules stipulate that it can if the SEC does has not raised any objections now that 75 days will have elapsed since the initial filing for the ETF’s listing. From rumors to confirmation, the timespan was particularly short, so it felt like it was coming out of the blue. On the rumors and the confirmation of the very same last week, Bitcoin surged from around 57,500 (BTCUSD) to currently 61,000 and closed on Friday near 62,500, or less than a thousand dollars from the record high daily close.

Despite the enthusiastic price action, the futures-based Bitcoin ETF will likely prove less important than cryptocurrency advocates hope. This is mainly due to the ETF holding Bitcoin futures that must be rolled forward with a negative roll yield with the expiry of every contract (the total yearly cost increases by as much as 5% – 10% on top of the management fee) rather than holding “physical” Bitcoin that the ETF stores. As well, Bitcoin futures may not have the same price as price as physically held Bitcoins, potentially exposing investors to price premium. The lower management fee for Bitcoin ETFs was previously acknowledged, but this does not benefit investors holding Bitcoin futures ETFs. This all effectively makes holding futures ETF rather expensive even if more convenient or less risky for some investors. For these reasons, the ETF will likely not attract many long-term investors presumably making the futures ETF less influential on Bitcoin than anticipated.

The futures ETF could arguably lead to increased confidence from the SEC in the crypto space to subsequently list a spot ETF, as many cryptocurrency advocates reckon. While this may be true, there are notable differences between a Bitcoin spot ETF and a futures ETF, especially the fact that the physical Bitcoins need to be held by a custodian, which increases the risk of loss via hacking attacks or exchange failures. Moreover, the Bitcoins need to be bought, sold, and stored in a highly unregulated environment, specifically on the native crypto-financial service providers, something the SEC is likely not comfortable with. For the SEC, these factors can act as a significant barrier to allowing a spot ETF be listed. For example, the SEC has pushed the deadlines of four Bitcoin spot ETF applications to November and December this year.

Elsewhere, on Friday the Guernsey financial regulator approved a European Bitcoin spot ETF by Jacobi Asset Management, a London-based multi-asset investment firm, with the Bitcoin itself to be stored by Fidelity Digital Assets, a subsidiary of Fidelity Investments. The ETF will be open to investors outside the US on the CBOE Europe Equities exchange under the condition that it receives a listing approval from Financial Conduct Authority (FCA), a financial regulator in the UK. The approval of this spot ETF arguably puts additional pressure on the SEC to list a spot ETF in the US as well.

Source: Saxo Group
Source: Saxo Group

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.