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Bitcoin ETFs: What Investors Should Know

Bitcoin ETFs could be approved in the US soon; here is what you should know about how they work.

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This story originally appeared on Zacks

- Zacks
  • (4:30) - Breaking Down The Current Bitcoin ETF Filings
  • (8:45) - Futures Backed vs. Physically Backed Bitcoin ETF: Which Is More Attractive?
  • (15:25) - Understanding The Approval Timeline: Who Will Be The First Available?
  • (18:50) - Evolve ETFs Success In Canada: Bitcoin ETF (EBIT)
  • (29:00) - Which Type of Bitcoin ETF Is Best For Your Portfolio?
  • (32:35) - Understanding The Difference Between Bitcoin and Ethereum?
  • (36:40) - What Impact Will China’s Cryptocurrency Regulations Have On The Market?
  •                 Podcast@Zacks.com

 

In this episode of ETF Spotlight, we focus on bitcoin ETFs, which may get regulatory approval in the US soon. It has been eight years since the Winklevoss brothers first applied for a bitcoin ETF. Many ETF providers have since filed for a crypto ETF, but the SEC has denied all those requests. A bitcoin ETF may finally become a reality this year.

In the first part of this episode, my guest is James Seyffart, ETF Research Analyst at Bloomberg Intelligence. We talk about the state of bitcoin ETF filings and why an ETF could be approved in October.

In the second part, I speak with Raj Lala, CEO at Canadian ETF provider Evolve ETFs.  Evolve currently offers three crypto ETFs. We discuss how these ETFs work.

The bitcoin market capitalization now exceeds $800 billion and some public companies like Tesla TSLA and MicroStrategy MSTR hold it on their balance sheets. While the digital currency can be easily bought on platforms like PayPal PYPL, Coinbase COIN and Robinhood HOOD, many investors prefer an ETF that would help them hold bitcoin safely and conveniently in their brokerage accounts.

In the absence of an ETF, investor use product like the Grayscale Bitcoin Trust GBTC that can trade at a significant discount or premium to their NAV.

SEC Chair Gary Gensler has signaled his preference for ETFs that invest in futures. Futures based products are not as efficient as the physical based products in general as derivatives add another layer of complexity, with the need to rollover. They also are not very good at tracking spot prices.

Canadian regulators have approved several cryptocurrency ETFs that are trading smoothly.

Evolve offers a bitcoin ETF EBIT, an ether ETF ETHR and just this week, they launched a multi-cryptocurrency ETF.

Raj believes bitcoin acts as a store of value and that’s why it is called digital gold, whereas ether has become an essential building block for digital finance.

Tune in to the podcast to learn more.

Make sure to be on the lookout for the next edition of the ETF Spotlight and remember to subscribe! If you have any comments or questions, please email podcast@zacks.com.



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