Spot Bitcoin ETFs in the US Could Outperform Futures ETFs!

• The most accessible way for US fund investors to interact with cryptocurrencies is by investing in products tracking Bitcoin futures contracts.
• Analysts suggest that the introduction of spot-based funds may more accurately track the price of money and potentially be more cost-effective.
• Bitcoin futures ETFs have struggled to advance after initially experiencing strong momentum. They have failed to keep up with Bitcoin’s rally this year.

The crypto world is awaiting approval from the SEC for a spot Bitcoin ETF, but these ETFs could become powerful enough to threaten the existing Bitcoin futures ETFs!

Spot Bitcoin ETFs Can Make a Big Impact!

The US crypto market continues to await approval for its first spot Bitcoin ETF from the SEC. Analysts expect the arrival of the spot Bitcoin ETF to be around the beginning of 2024 based on ongoing developments.

However, some see spot ETF products as a threat to the Bitcoin futures ETFs already present in the market. Currently, the most accessible way for US fund investors to interact with cryptocurrencies is by investing in products tracking Bitcoin futures contracts. These funds made a significant impact when they were introduced in October 2021, breaking records.

However, they have struggled to maintain their initial excitement, and their total market values have remained stable at around $1 billion since then. Analysts suggest that the introduction of spot-based funds may more accurately track the price of money and potentially be more cost-effective. Spot products could challenge the existing Bitcoin futures ETFs. James Seyffart, an analyst at Bloomberg Intelligence, said:

“We expect assets and volume to gather around one or more spot-Bitcoin ETFs since they are superior products for most investor types. New money, including those looking to buy and hold for the long term, will likely be attracted to a spot product that’s probably cheaper and more efficient than existing futures ETFs.”

Spot Bitcoin ETFs – A $100 Billion Market

According to Bloomberg Intelligence analysts, the arrival of spot Bitcoin ETFs could create a $100 billion market in the near future. This could lead to significant outflows from Bitcoin futures ETFs due to their higher product costs and lower performance compared to spot Bitcoin ETFs.

Bitcoin futures ETFs have struggled to advance after initially experiencing strong momentum. They have failed to keep up with Bitcoin’s rally this year. Analysts believe that with the introduction of spot Bitcoin ETFs, there could be significant outflows from Bitcoin futures ETFs. This is due to higher costs and performance underperformance.

The introduction of spot ETFs can offer its own attractive features, such as the potential to provide a real-time reflection of supply and demand. Given the increasingly competitive ETF landscape, where fee wars have become a common occurrence both in new categories and well-established asset classes, many expect intense competition among different issuers.