Analyst says Bitcoin futures ETF ‘better than nothing, but ‘not as good as’ spot ETF
The ProShares Bitcoin Futures ETF arrived with a bang, and hit more than $1 billion in assets under management [AUM] in around 48 hours of being listed. Adding to this, Bitcoin touched a new all time high of $67,017 last week. All impressive stats, no doubt, and experts had plenty to say.
During an episode of the Unconfirmed podcast, host and journalist Laura Shin spoke to the pseudonymous Plan B – creator of the Bitcoin Stock-to-Flow Model – about Bitcoin ETFs.
Understanding is everything
The ProShares Bitcoin ETF is finally trading, but experts and investors are still divided as to whether a Futures ETF or a Spot ETF would have been the better choice. Coming to this debate, Plan B had a clear answer. He said,
“Bitcoins futures ETF is…it’s better than nothing, but it’s not as good as a Spot ETF. And so I’m already happy with the Futures ETF, and I understand it, because futures are instruments that the SEC understands.”
He went on to discuss how many traditional investors and even companies didn’t understand Bitcoin – or Bitcoin assets – on an institutional level. Plan B also suggested that the SEC didn’t understand the “digital currency world” either or needed to “get used to it.” He felt that “futures on Bitcoin” could help investors understand Bitcoin, because they already understood futures as a concept.
Coming to the cash-and-carry trade, he added,
“The Futures Bitcoin price is approximately annualized 10% higher than the Spot price at the moment, so a Bitcoin Futures ETF would lose that 10% contango premium compared to a Spot ETF…”
Simply speaking, Plan B concluded that the Bitcoin Futures ETF was a “first step.”
Other influencers have also chimed in to add their opinions to the Futures vs Spot ETF debate.
As previously reported, Unchained Capital exec, Parker Lewis called the Bitcoin Futures ETF the SEC’s “best cop-out.” He theorized it could be the regulator’s response to powerful institutions entering the crypto scene. Furthermore, Lewis also worried about counter-party risk.
For his part, analyst and journalist Raoul Pal pointed out that the idea of Bitcoin was to have self-custody over the asset, instead of multiple parties “taking a slice out of your pie.”
Meanwhile, Lark Davis agreed with Pal.
He is right! #bitcoin futures backed ETFs are really WTFs! https://t.co/osZAkmhh6g— Lark Davis (@TheCryptoLark) October 15, 2021
Calculating the pandemic
While a Bitcoin Futures ETF could affect the price of the king coin, a pandemic has already done just that. In response to Shin, however, Plan B said, Bitcoin’s price had benefited from institutions printing more money because of COVID-19.
Coming to the “rising” problem of inflation, Plan B commented,
“…it will be nasty, I think. And there will be winners and losers, and I think Bitcoin is one of your safe bets in this scenario.”