• Category
  • >Financial Analytics

Everything About Bitcoin Futures ETFs

  • Bhumika Dutta
  • Oct 08, 2021
Everything About Bitcoin Futures ETFs title banner

With the advancement of blockchain in finance, cryptocurrencies have paved their way to the world of finance quite easily, and now is one of the most discussed topics of financial analytics. 


The most popular cryptocurrency to be used and discussed is Bitcoin, as it is the largest cryptocurrency available in the market by market capitalization. 


Anyone interested in financial exchanges already has an idea about Exchange-Traded Funds (ETFs). Exchange-traded funds are regulated financial instruments that can hold a variety of assets. 


The potential of an ETF that follows bitcoin is the biggest chance for this sort of link for cryptocurrency fans and investors wanting to profit on the rising popularity of exchange-traded funds (ETFs). 


Investors can buy and sell ETF shares in the same way they would equities. But, ETF shares can be purchased and sold at any time during market trading hours, unlike mutual funds.


(Related read: 14 Types of Trading)


In this article, we will discuss everything about the Bitcoin Futures ETF including its definition, working, its approval, and the risks that come along with it. 


But, before we understand what Bitcoin Futures ETF is, it is important to clear out this given question:


What are bitcoin futures?


Bitcoin futures are a form of derivative trading contract in which two parties agree to purchase or sell bitcoin at a predetermined price at a future date, usually on a currency market. 


So, the actual market price of bitcoin at the time of buying or selling does not play a huge role in this exchange, and the contract settlement date or the expiry date is the agreed-upon date by which both parties must satisfy their commitments. Although, there remains some dependency on the market price. 


When a bitcoin futures contract expires, whoever committed to acquire bitcoin must do so at a premium or a discount, since it's extremely improbable that bitcoin would be the same price when the contract expires as it was when it was negotiated. The amount that individuals must pay is determined by the current market price (commonly known as the spot price) and the value of each futures contract in their possession.


There are few things to note about bitcoin futures since it is a contract that is signed by two sides if one side is experiencing profit, the other is bound to incur a loss. Contracts for futures always have an expiration date. Investors can opt to sell their contracts before they expire to another party or wait until they expire to settle them. Based on the current settlement of futures traders, the prices of bitcoin futures and the market price of bitcoin tend to differ. 


If more individuals are betting on bitcoin's price rising, the contract's value will naturally be higher than bitcoin's current market price. When more traders predict that the price of bitcoin will decline in the future, the situation is the inverse.


As the expiration date of contracts approaches, the values of bitcoin futures contracts and bitcoin on spot markets tend to converge.


(Also read: Difference between Bitcoin and Bitcoin Cash)


What is the Bitcoin Future ETF?


According to coindesk, a bitcoin futures ETF is an exchange-traded fund that allows investors to acquire exposure to bitcoin values without actually purchasing the cryptocurrency. An exchange-traded fund (ETF) follows the price of an underlying asset. And, in the case of a bitcoin ETF, the investment instrument's underlying asset is bitcoin.


Because investors might hypothetically arbitrage away the spread between the ETF and the underlying asset if it were too wide, the price of an ETF will generally retain a high correlation with the price movement of the underlying asset. 


Similarly, tying the price of a bitcoin ETF to a bitcoin hoard is a common strategy. All the business needs to do now is make sure it has enough bitcoin on hand to back up the value of its bitcoin ETF.


Although this is a very common and effective method, the notion of a physically-backed bitcoin ETF has been met with skepticism by the Securities and Exchange Commission in the United States. The decision was based on the fact that bitcoin is traded on mostly unregulated exchanges, making it vulnerable to fraud and manipulation.


As per ETF Trends, the VanEck SolidX Bitcoin Trust ETF was introduced earlier this year by VanEck and SolidX, a fintech business with bitcoin-related initiatives. This ETF would be aimed at institutional investors, with a share price of $200,000 at the start. 


XBTC is a cryptocurrency that is used to track an index that is linked to a group of bitcoin trading desks. 5 The assumption is that by broadening the scope of the ETF's emphasis, XBTC will be able to address the SEC's concerns about funds connected to bitcoin.


(Related read: What is FinTech?)


How is bitcoin ETF different from Bitcoin future ETF?


Bitcoin ETFs are backed by actual bitcoin, whereas bitcoin futures ETFs are backed by bitcoin derivatives (futures contracts). 


Due to market sentiment, the price of bitcoin futures may differ from the current price of bitcoin, therefore bitcoin futures ETFs may occasionally follow the price of bitcoin incorrectly. 


Because the ETF is backed by actual bitcoin, there is no risk of price divergence in the case of a bitcoin ETF.


How does Bitcoin ETF work?


As we know by now, an exchange-traded fund (ETF) is a type of investment instrument that follows the performance of a certain asset or group of assets. ETFs allow investors to diversify their portfolios without having to hold the assets. ETFs are a simpler option to buying and selling individual assets for those who want to focus just on profits and losses. 


Traditional ETFs allow investors to readily diversify their holdings since they target larger baskets of names with something in common—for example, a focus on sustainability or equities representing the video game industry and associated industries.


A bitcoin ETF is a fund that tracks the price of the world's most popular digital currency. This allows investors to invest in the ETF without having to go through the time-consuming process of trading bitcoin. 


Furthermore, because the ETF would not be directly invested in bitcoin, holders will not have to worry about the complicated storage and security protocols that cryptocurrency investors must follow. With bitcoin future ETF, the price mimicked is that of bitcoin futures, and not the actual bitcoins. 


The ETF's value is derived, in essence, from the price fluctuations of bitcoin futures. In this case, the ETF's issuer must have holdings in the bitcoin futures market and tie the ETF's price to those bitcoin futures contracts. So, it is better to invest in Bitcoin Futures ETF as it is safer and more predictable. 


(Also read: Bitcoin mining)


Risks of Bitcoin Futures ETF:


The following are the downsides of Bitcoin futures ETF:


  1. The price trackers can also act as one of the biggest risks of the Bitcoin Futures ETF, as all the ETFs are dependent on the accuracy of these price trackers. When the price of bitcoin futures is greater than the spot price, we may claim the ETF is following the price of bitcoin incorrectly. 

This is referred to as "contango," and it is harmful to investors who hold bitcoin futures ETFs. Backwardation, on the other hand, happens when the futures price is lower than the current price of bitcoin.

  1. When the bitcoin futures contracts expire, the business issuing the bitcoin futures ETF must roll them over (that is, the process of renewing contracts by selling the almost expired ones and using the revenue to purchase new contracts with a farther expiration date).

  2. When the price of a bitcoin futures contract is lower than the price of a new contract, the money from selling contracts that are about to expire will not be enough to buy the same number of contracts that will expire later. The ETF's performance will be harmed as a result of this scenario.


(Must click: Top Companies Adopting Bitcoins)





Although the risks are something that might make someone hesitate before investing in Bitcoin futures, as a bitcoin futures ETF is another form of regulated financial product that allows investors to indirectly engage in the bitcoin market. 


The emergence of bitcoin ETFs and bitcoin futures ETFs might assist to accelerate bitcoin increases, as well as gains across the cryptocurrency market because many other digital currencies are closely connected to bitcoin's performance. 


(Must Read: What is the Future of Cryptocurrency?)


In this article, we have briefly discussed bitcoin futures and bitcoin futures ETF, the difference between bitcoin ETF and bitcoin futures ETF, and the risks that come along with bitcoin future ETF. 

Latest Comments

  • evelynmiller00977542816382a6461d

    Jun 29, 2024

    In order to start the recovery process, it is crucial to report an investment scam to the authorities. While I looked around for a Quality Recovery service, I made sure to record all the information I supplied with the fraudsters. I found the service to be frustrating. I had to take the law into my own hands or risk losing everything because law enforcement authorities had given up on trying to find the perpetrators or get my money back. My alarm was raised to the point where soon after I placed my withdrawal, which was supposed to be transferred to my JP Morgan Chase, it was refused with a response from Barclays (along with fictitious paperwork) requiring that I pay 10% of my withdrawal amount to proceed with my withdrawal. I became so alarmed about it that I involved my son. He was certain that I had been scammed after viewing my trading account, emails, and papers I had received over the months. He was essential in putting me in touch with the greatest recovery customer service, "WIZARD JAMES RECOVERY." The rest is history. I was able to stop more harm from happening to other people by recommending WIZARD JAMES RECOVERY because they have the technical expertise needed to work through the complexities of the blockchain and use cutting-edge methods to recover cryptocurrency assets that have been lost. The ideal team for you is WIZARD JAMES RECOVERY TEAM; their email address is wizardjamesrecovery@ usa.com. You have to act swiftly before it becomes too late. For further information visit their website: WIZARDJAMESRECOVERY.COM

  • leodavies89564131d72a2754f61

    Jul 02, 2024

    Before I came across the Wizard James cryptocurrency recovery team, I had always believed it would be impossible to recover stolen cryptocurrency. This team was able to effectively recover my stolen Ethereum and Bitcoin funds. I lost every penny my family had saved up in an attempt to double it as one of the numerous victims of a cryptocurrency fraud. My family and I were going through a really tough moment; I was despondent and had given up on getting what I had invested back. A few weeks ago, I stumbled upon a recommendation regarding Wizard James and their successful recovery of cryptocurrency for numerous fraud victims when looking for tips on how to retrieve my cryptocurrency on Google. I got in touch with them right away and gave them all the details, and Wizard James was able to get my money back in two days. Sincerely grateful for their assistance, I assured them that I would refer them to others who share my interests. For additional information, you can conveniently visit their webpage at: WizardJamesRecovery.com. Without a doubt, Wizard James is the greatest at retrieving cryptocurrency funds.

  • audreywalker77654593145a188042dc

    Jul 06, 2024

    It seemed like an eternity of ups and downs, but at last came the moment of victory. I was able to get my lost Bitcoin back with the help of Wizard James Recovery Services, a highly qualified group committed to assisting people like me in recovering their lost cryptocurrency. My shoulders seemed to be lighter, and I couldn't help but rejoice in this moment of victory. It's impossible for me to adequately describe the relief and happiness I felt after finding my lost investment. It was more than simply the financial worth of bitcoin; it was also about the feeling of fairness and the certainty that experts exist who can guide you through the murkiest parts of the cryptocurrency world. Professional recovery companies like Wizard James Recovery have the knowledge and specific equipment needed to manage the intricate realm of Bitcoin recovery. They know how to apply cutting-edge techniques to recover lost money, are skilled at handling a variety of frauds, and are knowledgeable about the nuances of blockchain technology. Their resources and experience can have a big impact on the healing process and provide people a chance to get their money back. It is important to realise that seeking professional assistance is a smart and considered decision rather than a sign of weakness if you want to increase your chances of making a full recovery. The capacity of professional recovery teams to assist people in avoiding typical pitfalls and frauds during the recovery process is one of the main advantages of working with them. These groups can offer helpful advice to prevent people from falling into scammers' traps because they are knowledgeable about their methods. People who seek professional assistance can go through the recovery process with confidence, knowing that experts are available to support them and keep them safe. Making this choice can save money, but it can also save important time and mental stress. My involvement with Wizard James Recovery has instilled in me the value of accepting obstacles and obtaining expert assistance when confronted with apparently insurmountable tasks. Admitting that you require the knowledge and assistance of those who are familiar with the nuances of cryptocurrency recovery is OK. You cannot succeed on your own. It is important to always value the qualities of perseverance and patience. Although getting back lost cryptocurrency is rarely easy, success is achievable if one has a strong will and the perseverance to keep going. It's critical to seek professional advice, but it's also critical to exercise caution. There are reputable recovery teams, such as Wizard James Recovery, but there are also con artists and false agencies. Choose carefully who you trust with your recovery path; educate yourself, do your homework. My experience with Wizard James Recovery changed the course of the difficult process of getting my lost Bitcoin back. Visit their website page to learn more about them at https://wizardjamesrecovery .com/ Email: wizardjamesrecovery@ USA.com

  • samwhites85505098e88b9184fbb

    Jul 07, 2024

    It was lately that I had to hire a coder for Crypto-Recovery. I'm rather impressed. With the correct coder, anything is possible in the tech and cyber world, I discovered. It seems right to me to put you all in contact with a legitimate programmer if you have fallen for a Bitcoin or other cryptocurrency scam. My experiences with DRIP FX, an investment company, became problematic when I attempted to withdraw the 47,955 USD I invested with them. The so-called Bit miners were unable to assist me in getting access to my money. I made all of my investment deposits using untraceable cryptocurrency coins, yet I persisted in trying to get my money back. Fortunately, I was able to get my money back with the help of Wizard James Recovery Company's assistance. I applaud their cyber prowess. If you've ever needed a programmer's assistance, please get in touch with: wizardjamesrecovery@ usa.com They offer so many services such as: - Social Media Hacking - Gathering evidence of infidelity - Upgrading credit scores - Modifying grades - Intercepting texts/SMS - Remote device control - Recovering lost files - Surveillance and tracking - Providing cyber protection

  • donnaevans5566cb57b33698ec4c83

    Jul 10, 2024

    With the globe struggling with unstable economies and a constantly changing digital environment, Bitcoin's incredible return is proof of the strength of ingenuity, tenacity, and a steadfast faith in the revolutionary potential of decentralised financial systems. Not only has the "Wizard James Recovery's Miracle" brought Bitcoin back to life, but it has also rekindled the whole cryptocurrency ecosystem, opening the door for the possibility that digital assets will become more and more important in the world of finance. I was saddened to learn that 230,000 CAD worth of priceless Bitcoin had been taken from my digital wallet due to hacking. Everything was falling apart, and I felt violated and helpless, like some evil enchantment had been cast upon my existence. But by a lucky break, I learned about the Wizard James Recovery team, a dedicated group of cyber security specialists with the mystic skills and lore to locate and retrieve stolen cryptocurrency. These contemporary sorcerers were able to track my stolen Bitcoin's movements across the complex blockchain with a few keystrokes and some arcane spells. They used sophisticated algorithms and divination practices to navigate the intricate network of digital wallets and exchangers and locate the whereabouts of my pilfered money. They seemed to have wielded great magic, manipulating the fundamental principles of technology to suit their purposes. The Wizard James recovery team was eventually able to get my 230,000 CAD back after days of nonstop work, with my earnings, which were also stolen in Bitcoin, returning it triumphantly to my digital wallet. I marvelled as the money miraculously came again. It felt amazing, like a huge weight had been taken off my shoulders. My confidence in the security of my digital assets was completely restored, and the nightmare of my stolen cryptocurrency had been defeated thanks to the skill of these digital alchemists. Email Wizard James Recovery today for assistance on: WIZARDJAMESRECOVERY @USA.COM

  • brownbarnaby633b6633600fed4182

    Jul 13, 2024

    WHILE SCAMS CAN TAKE MANY DIFFERENT SHADES, THEY ARE ALL INTENDED TO STEAL YOUR HARD-EARNED MONEY. My first error was believing that investing in cryptocurrencies would allow me to increase my income. I fell victim to an investment scam and lost $97,590 in bitcoins as a result. After a few weeks, I was exploring the internet when I stumbled into a forum about a recovery guy named Wizard James Recovery who claimed they could help me get my bitcoins back in a few hours. At first, I had my doubts, but after reaching out to them, Mr. James and his team managed to retrieve all of my missing bitcoins in under 48 hours. They are the most skilled group for recovering bitcoins available. If you face similar issues, you should contact them immediately. Contact information: wizardjamesrecovery(at)usa(dot)com or via what'sapp // +447418367204

  • elsajones972f642cf1c34dc40c4

    Jul 14, 2024

    Many people routinely become victims of various frauds and disregard their options for assistance in doing so. Without a doubt, the best computer specialist to help you recover your money, monitor your alleged unfaithful partner's gadgets, upgrade your institution result and address any other cyber security concerns you may have is the Wizard James Recovery company. You should not attempt to ignore or move on from bitcoin fraud, even if you have previously been duped by a fictitious or an unregulated broker. This is something you shouldn't overlook because it might have a long-term effect on you. The good news is that getting assistance after falling for one of these scams is now much easier because of modern technology. It is true that those who fall prey to bitcoin fraud might be able to get their money back. The secret to navigating these frauds is knowing where to search for the most effective assistance. A similar situation happened to me when I was defrauded of $43,000 in Bitcoin. Luckily, I came across a hacker who could help me. You may be sure that any valuables that are misplaced or stolen will be deposited back into your wallet or bank account, whichever you prefer. Wizard James Recovery can be reached by email at (WIZARDJAMESRECOVERY AT USA DOT COM) if you have any questions.

  • miller7tiffany5d5b8775cdb7435f

    Jul 17, 2024

    Crypto Recovery Expert | Recover Stolen Cryptocurrency "I cannot thank Captain WebGenesis enough for helping me recover my money from a crypto scam. I was devastated when I realized I had fallen victim to a fraudulent investment Website, but thanks to Captain WebGenesis's services, I was able to get my hard-earned money back. Their group of experienced experts put forth a lot of effort to work on my case and they successfully traced and recovered my lost funds. Without the help of Captain WebGenesis, I don't know where I would be today. I appreciate Captain WebGenesis for offering this crucial and worthwhile service." Contact Information; Website; Captainwebgenesis .c om Email; Captainwebgenesis@hackermail .c o m Whatsapp; +1 (501, 436 (93 62

  • miller7tiffany5d5b8775cdb7435f

    Jul 17, 2024

    Crypto Recovery Expert | Recover Stolen Cryptocurrency "I cannot thank Captain WebGenesis enough for helping me recover my money from a crypto scam. I was devastated when I realized I had fallen victim to a fraudulent investment Website, but thanks to Captain WebGenesis's services, I was able to get my hard-earned money back. Their group of experienced experts put forth a lot of effort to work on my case and they successfully traced and recovered my lost funds. Without the help of Captain WebGenesis, I don't know where I would be today. I appreciate Captain WebGenesis for offering this crucial and worthwhile service." Contact Information; Website; Captainwebgenesis .c om Email; Captainwebgenesis@hackermail .c o m Whatsapp; +1 (501, 436 (93 62

  • jacksonlewis009721dd38f5af674712

    Jul 18, 2024

    The sophistication of the bitcoin scam is increasing, and a lot of individuals fall victim to it. It might be annoying, but don't feel bad about it. Reporting bitcoin scams is necessary, and if you have fallen victim to one, you need to obtain all assistance you need. An online foundation has been set up to assist clients in recovering their money from dishonest people who have stolen it. For reliable and efficient assistance in recovering your money if you have fallen victim to a bitcoin scam, get in touch with Wizard James Recovery Company. I became a victim of a bitcoin scam. I attempted to invest in bitcoin but ended up losing $329,00 USD. I owe Wizard James Recovery Company a huge debt of gratitude for helping me recover every last bit of Bitcoin that thieves had stolen. To find out more about their services, get in touch with them through WhatsApp +447418367204.