U.S. Bitcoin ETF Is Net Zero Bitcoin
While a U.S. Bitcoin ETF sounds good in theory, peek under the hood and investors will find a futures-based instrument riddled with contradictions that has very little to do with bitcoin anyway.
The post U.S. Bitcoin ETF Is Net Zero Bitcoin appeared first on LUXUO.
Image: David McBee/Pexels
Considering that there?s an app for practically everything these days, it stands to reason that it was really only a matter of time before Wall Street lobbied Washington sufficiently to roll out its own version of bitcoin ? the ultimate bitcoin app for institutional investors.
While many investors cheered the arrival of the ProShares Bitcoin Strategy ETF, the first U.S. ETF to feature all of the flavours of bitcoin, with none of the fat, bitcoin maximalists chuffed at its lack of real bitcoin inside its ETF shell.
Unlike some bitcoin ETFs in Europe and Canada, the American version is backed by bitcoin futures traded on the Chicago Mercantile Exchange, which themselves are cash-settled instruments.
But what?s the big deal"
What?s an ETF"
Image: Alesia Kozik/Pexels
To understand why a futures-backed ETF, especially one that is cash-settled is a bit like saying a pop tart is full of fruit, it?s first necessary to understand what an ETF is in the first place.
In a nutshell, an ETF is a type of investment fund that can be traded on a stock exchange.
Similar to a mutual fund, the key difference between an ETF and a mutual fund is that shares in an ETF are bo...
The post U.S. Bitcoin ETF Is Net Zero Bitcoin appeared first on LUXUO.
Image: David McBee/Pexels
Considering that there?s an app for practically everything these days, it stands to reason that it was really only a matter of time before Wall Street lobbied Washington sufficiently to roll out its own version of bitcoin ? the ultimate bitcoin app for institutional investors.
While many investors cheered the arrival of the ProShares Bitcoin Strategy ETF, the first U.S. ETF to feature all of the flavours of bitcoin, with none of the fat, bitcoin maximalists chuffed at its lack of real bitcoin inside its ETF shell.
Unlike some bitcoin ETFs in Europe and Canada, the American version is backed by bitcoin futures traded on the Chicago Mercantile Exchange, which themselves are cash-settled instruments.
But what?s the big deal"
What?s an ETF"
Image: Alesia Kozik/Pexels
To understand why a futures-backed ETF, especially one that is cash-settled is a bit like saying a pop tart is full of fruit, it?s first necessary to understand what an ETF is in the first place.
In a nutshell, an ETF is a type of investment fund that can be traded on a stock exchange.
Similar to a mutual fund, the key difference between an ETF and a mutual fund is that shares in an ETF are bo...
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