A widely known stock exchange is getting in the Bitcoin (BTC) game after filing for a Bitcoin exchange-traded fund (ETF).
NYSE Arca just filed for a physically backed Bitcoin ETF with the U.S. Securities and Exchange Commission (SEC).
Alongside Bitcoin index provider Bitwise, NYSE Arca is pursuing a Bitcoin ETF with direct exposure to Bitcoin.
According to Bitwise’s chief intelligence officer Matt Hougan, NYSE Arca’s application specifies that it would hold actual Bitcoin rather than Bitcoin futures.
“Today NYSE filed for a Bitwise Bitcoin ETF!
It would hold actual BTC, *not* futures.
There’s already a separate BTC futures-based Bitwise ETF filing. But actual BTC is better.
And we believe it’s finally possible.
We’re sharing 100+ pages of analysis on why.”
Hougan points to three reasons why holding actual BTC is preferable to futures. First, it would save the firm roughly 6-12% in costs normally associated with futures funds. Second, ETFs cannot hold 100% Bitcoin futures, and Hougan estimates that a Bitcoin Futures ETF would come with about a 15% dilution.
Third, he notes that futures come with tail risk, which exposes investors to their assets’ most extreme downside performance, and that simply holding BTC would avoid such risks altogether.
“In sum: A futures-based Bitcoin ETF comes with ~6-12% all-in costs, ~15% dilution, and tail risk.
Useful for certain investors, but not ideal.
A direct BTC ETF avoids all that.”
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