Grayscale Investments, known for its Grayscale Bitcoin Trust (GBTC), plans to file an application to convert its flagship fund into a spot ETF early next week. Grayscale is a major player in digital assets and is currently looking to refinance to combat competition.
The first Bitcoin Futures ETF is set to begin trading early next week, which will bring more competition to Grayscale.
The U.S. Securities and Exchange Commission (SEC) said on Friday that it would approve the first Bitcoin futures ETF known to trade on the New York Stock Exchange early next week. The move was welcomed by many as a “turning point”, and Bitcoin has finally solidified its legitimacy as an asset class on Wall Street and among mainstream investors.
The management fee for ETFs managed by investment firm ProShares is lower at 0.95% and Grayscale’s is 2%. Another benefit of the new ETF is that there is no redemption period. This issue has plagued GBTC investors from the very beginning.
Why Gray’s Potential Bitcoin Spot ETF Outperforms Futures ETFs
The Bitcoin Futures ETF is one step in the right direction to make it easier for ordinary investors to acquire cryptocurrencies. However, many cryptocurrency investors believe that ETFs use derivatives contracts traded on the Chicago Mercantile Exchange (CME) that are far worse than spot ETFs that actually hold bitcoin.
Contango is a phenomenon that occurs when the futures price is higher than the expected future spot exchange rate, meaning that investors lose potential profits because the maturity price of a bitcoin futures contract is higher than the spot exchange rate of the cryptocurrency. Joe Orsini, research director at Eagle Brook Advisors, described the shortcomings in his Twitter post:
If a Bitcoin spot ETF is approved by Grayscale, it will be backed by real Bitcoin, rather than a derivative that tracks cryptocurrency prices. Grayscale already accounts for a significant portion of the Bitcoin supply in circulation worldwide.
Barry Silberts, founder of Digital Currency Group and Grayscale Investments, posted a warning on Twitter about future changes to GBTC. He joked:
“Friends won’t let friends buy and hold futures-based ETFs.”
Text Proof: Newsbtc
Information Source: Compiled from COINUPDATE from 0x information. Copyright belongs to the author Ben Wewer and may not be reproduced without permission.