*5.2. Bitcoin Futures ETF*

Several Bitcoin ETF applications have been rejected since 2013, citing market manipulation, fraud and failure to protect consumers. On 19 October 2021 at 9:30 am EST, the SEC approved the issuance of a bitcoin futures ETF, which will probably lower the investment threshold for bitcoin after the adoption of the bitcoin futures ETF. With the caveat that the purchase of a bitcoin futures ETF is an indirect investment in bitcoin, not a direct investment. The purchase here is simply a futures contract, which is less effective at tracking the price of bitcoin. For better tracking of the price of bitcoin, a spot ETF would be a better option, but is not available at this time as the liquidity of bitcoin may not be sufficient for the liquidity required by institutions. Bitcoin futures ETFs are regulated to track the spot bitcoin price using CME regulated futures contracts, which can be regulated by traditional exchanges for added security. However, there are two disadvantages to bitcoin futures ETFs: one is that futures have a premium and discount problem that if the bitcoin price

changes by 1% in an hour, the bitcoin futures ETF may drop by 2%, which is a significant deviation, meaning that futures ETFs do not track the bitcoin price well enough; the other is that investment costs are high, as futures contracts have an expiry date, and near the expiry date. This is the cost of shifting the futures ETFs, which can eat up some of the profits, so bitcoin futures ETFs are not suitable for long-term holdings, and can be used for short-term investments. In reality, Bitcoin also requires the retention of an associated Bitcoin wallet as well as registration with a cryptocurrency exchange, which remains unknown to those unfamiliar with the space and requires a degree of self-education. With a Bitcoin futures ETF, investors do not need to worry about private keys, storage or security. They own shares in the ETF, just like their shares, and have access to the cryptocurrency market without having to buy and hold cryptocurrency. Bitcoin futures ETFs are managed by companies that buy and hold actual bitcoins, with prices linked to the bitcoins held in the fund. The company lists the ETF on a traditional stock exchange and we, as investors, can trade the ETF just like any other stock.

In conclusion, for investors who are reluctant to invest in bitcoin directly due to price, security and regulation. buying a bitcoin futures ETF is an opportunity to invest in cryptocurrencies, which adds to the focus on cryptocurrencies in the traditional financial markets, which is why I believe that bitcoin futures ETFs are an important option for some investors in the future.
