When Is the Best Time to Invest in Bitcoin Futures ETFs?

Investing in Best Bitcoin Futures Etfs: Advantages and Disadvantages

It is challenging for beginners to understand the Bitcoin Futures ETFs. The crypto market, its popularity, and return on investment make people eager to earn handsome amounts on the investment. The gateway to the crypto market is very difficult for a beginner. Therefore, Bitcoin ETFs are created especially for those who want to avoid diving deep into digital currencies but still want to have them in their portfolio.

Bitcoin ETFs are a gateway that leads from a traditional market to the exciting world of digital currencies. They are special packages created by financial experts that you can find on regular stock exchanges.

                                                                           This article discusses the potential benefits of investing in Bitcoin futures etfs and who should consider doing so, such as those looking to diversify their portfolio and those considering investing in the cryptocurrency market.

Bitcoin ETF is an accessible entry point for retail investors into the complex cryptocurrency world. These ETFs are specially managed and regulated by experts for people who want to invest in crypto but want to avoid facing the challenges of managing their digital assets.

  • Bitcoin futures ETF replicates the price movement of Bitcoin.

  • These ETFs use future contracts to bet on the future price of Bitcoin; this allows investors to speculate on whether Bitcoin's price will go up or down.

  • Fund managers purchase these future contracts and bundle them into an ETF. In this way, they create a convenient way for investors to gain exposure to the price movements of Bitcoin.

  • As ETFs track the price moments of Bitcoin, they are also known for their high volatility, which results in significant value fluctuation, and this presents both opportunities and risks for investors.

Best Bitcoin Futures ETFs to invest in

Currently, Bitcoin ETFs are limited to holding Bitcoin futures contracts or stocks of companies and other ETFs connected to cryptocurrency. The United States Security and Exchange Commission is still evaluating whether it will ultimately give the green signal to ETFs directly holding Bitcoin.

  • There are currently 7 Bitcoin ETFs approved by the SEC for trading in the United States. 
  • More than 20 Bitcoin ATS are awaiting approval from the sec.

Here is the list of the top 5 Bitcoin Future ETFs 

  1. ProShares Bitcoin Strategy ETF (BITO): The first ETF in the field to receive approval for trading in the U.S. market. It debuted in October 2021 and became a heavily traded ETF in the market.

    • Asset Under Management: $1.1 Billion

    • Expense Ratio: 0.95%

    • Strategy: Bitcoin Futures

  2. ProShare Short Bitcoin ETF (BITI): It was introduced in June 2022. As of now, it is the only ETF approved by the SEC that mimics the inverse performance of Bitcoin. It is created for those who believe in the decline of Bitcoin. It is designed for short-term exposure and daily performance. 

    • Asset Under Management: $80 Million

    • Expense Ratio: 0.95%

    • Strategy: Decline in Bitcoin Futures

  3. VanEck Bitcoin Strategy ETF (XBTF): It was introduced in November 2021. It is an actively managed fund that bets on Bitcoin futures contracts and sometimes in Treasuries and cash. Due to its structure as a C-corp, it holds tax advantages.

    • Asset Under Management: $45 Million

    • Expense Ratio: 0.76%

    • Strategy: Bitcoin Futures

  4. Valkyrie Bitcoin Strategy ETF (BTF): It was launched in October 2021. It is an actively managed fund. It aims to invest about 100% of its net asset in Bitcoin's future contract. The leftover funds are invested in the U.S. government's security money market funds and corporate bonds.

    • Asset Under Management: $29 Million

    • Expense Ratio: 0.95%

    • Strategy: Bitcoin Futures

  5. Simplify Bitcoin Strategy PLUS Inc ETF (MAXI): It was introduced in September 2022 and is the newest one on the list. It follows the unique strategy of short-dated put and call spreads on global stock indices to help make money for its investors.

    • Asset Under Management: $25 Million

    • Expense Ratio: 0.97%

    • Strategy: Bitcoin Futures

Pros and Cons of Bitcoin Futures ETFs

Pros of Bitcoin Futures ETFs

  1. Price Exposure of Bitcoin: Bitcoin futures ETFs provide a route for investors to take part in the price movement of Bitcoin. All of this process gets done without the need to acquire or manage the cryptocurrency.

  2. Regulation and Safety: Unlike Bitcoin, these ETFs operate in a regulated environment and adhere to established financial standards and safeguards. This gives investors a sense of security and trust to invest indirectly in a cryptocurrency.

  3. Liquidity: Bitcoin future ETF offers a higher liquidity than other investment options. Investors can easily buy or sell shares on traditional stock exchanges with flexibility and accessibility.

Cons of Bitcoin Futures ETFs

  1. Indirect ownership: Investors in Bitcoin future EPF don't own Bitcoin itself. Instead, they hold shares in a fund that invests in futures contracts, providing them less cryptocurrency exposure.

  2. Complexity: Bitcoin futures ETFs can be complicated because of their performance, as it is bound to future markets with their complexities. This makes it difficult to understand its behavior.

  3. Additional Cost: The management fees associated with these future ETFs are high, affecting profits.

  4. Non-Tandem movement: It is not always true that the value of Bitcoin's future ETF will mimic the price of Bitcoin. Various factors can influence the performance, which can lead to discrepancies.

  5. Counterparty Risk: Bitcoin's future ETF comes with the race as the party on the other side of the future contract might not fulfill its obligation, which can impact its performance.

How to Invest in Bitcoin Futures ETFs?

Investing in Bitcoin Futures ETFs is similar to investing in traditional ETFs.

  1. Open a Brokerage Account: There are many online brokers available that offer the opportunity to invest in Bitcoin futures ETFs. Pick the one that suits your needs and begin your investing journey.

  2. Search and Purchase: After setting up a brokerage account, you must find the Bitcoin ETFs you are interested in investing in. Search the ETF ticker symbol, type in the number of shares you want to purchase, and click the buy button.

  3. Expense Ratio: ETFs come with an expense ratio, and the fees are directly deducted from the account. Before investing in an ETF, consider the cost associated with the investment.

  4. Risk Tolerance: Cryptocurrencies are highly volatile in nature. Their value dramatically fluctuates, and therefore, it is important to consider the financial goals before making an investment decision.

Who should consider Bitcoin Futures ETFs?

Bitcoin futures ETFs are created for experienced investors who are not solely dependent on Bitcoin's price but are also well-informed about the complexities of the future market. 

  1. Experienced: Those who have navigated the financial market before, are comfortable with the complex concepts, and possess a strong understanding of future operations and their potential impacts can consider Bitcoin futures ETFs.

  2. Strategic Approach: Bitcoin futures ETFs are not created to invest and track in Bitcoin. It is part of a broader strategy where investors use this instrument to protect other investments. They invest in the short-term price swings and the dynamic nature of the future market.

  3. Risk tolerant: Those investors or individuals should consider Bitcoin futures ETFs that are more risk tolerant than typical investors. Those who understand futures trading and its rewards and, most importantly, are equally aware of the substantial risk should consider Bitcoin futures ETFs.

Final Words 

Cryptocurrency is at its evolving stage. Many people need help to invest in cryptocurrency due to the complexities associated with it. Bitcoin's future ETF has emerged as a bridge between the traditional financial system and the complex digital currencies for investors who want to invest in cryptocurrencies without managing them. The Bitcoin futures ETFs offer investors the liquidity of the currency as they mimic the price of the Bitcoin. 

Bitcoin future ETFs are known for their liquidity as they hold the indirect ownership of Bitcoin that is too complex. Bitcoin future ETFs provide valuable tools to those investors who want to embrace the risks, benefits, and strategies—making an informed decision before investing is essential, as dealing with the crypto market is quite risky.

Suggested Articles:

  1. Top 10 altcoins to Invest in
  2. How Many Bitcoins Are Left for Mining?
  3. Bitcoin Price Prediction
  4. Bitcoin OR Ethereum?

Olivia Johnson 27 Oct, 2023


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