Bitcoin futures ETF are not suitable for long-term investors

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The launch in October of the first bitcoin futures ETF in the US was a positive moment for the cryptocurrency ecosystem, but such products are not suitable for long-term investments. That’s the opinion of Bitwise CIO Matthew Hugan on Scott Melker’s podcast.

Cryptocurrency futures ETFs are riskier than spot ETFs

“We did see billions of dollars come into the market, probably having an impact on price growth. However, it’s an imperfect product. It fits if you trade bitcoin for a week, but absolutely not if you hold an asset for a year or more,” he said.

Hugan called false the narrative that bitcoin futures ETFs will “open up the flow of money from Wall Street” to the industry.

Cryptocurrency futures ETFs are riskier than spot ETFs, he said. Because of volatility, the product involves higher servicing costs and is not the optimal solution for institutional investors to enter the market.

Hugan noted that bitcoin futures ETF do not have investment appeal for financial advisers who manage much of the U.S. private equity.

But CIO Bitwise sees the product’s emergence as a positive example of industry participants interacting with regulators. He also called it a good practice for industry representatives to meet with authorities and lawmakers to discuss the development of the crypto space. 

Hugan believes the next bull market will involve favorable regulatory changes, and it will happen sooner than everyone expects.

SEC approved ProShares’ bitcoin-ETF

As a reminder, the SEC tacitly approved ProShares’ bitcoin futures ETF prospectus on October 15. Shares of the fund started trading on the New York Stock Exchange on October 19.

Subsequently, the regulator authorized trading in similar products from Valkyrie Investments and VanEck. The application of the latter to launch ETFs based on the spot price of cryptocurrency was rejected by the regulator in December.

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