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In its latest listing for an exchange-traded fund (ETF) based on futures, Valkyrie uses one of the popular Twitter financial community memes known as “fintwit” to generate attention and interest.
On May 16, the investment firm filed a new application for an ETF based on Bitcoin futures, seeking to list it on the Nasdaq under the ticker “BTFD.”
Both Bitcoin-focused Valkyrie funds do not have direct access to Bitcoin itself; instead, they rely on Bitcoin futures traded on the Chicago Mercantile Exchange (CME). Bitcoin futures are financial contracts that allow investors to speculate on the future movement of the price of Bitcoin. These contracts oblige the buyer to buy or the seller to sell Bitcoin at a predetermined price on a specific date in the future. Unlike trading real bitcoins, which involves owning and holding the digital asset itself, bitcoin futures allow traders to speculate on the price of bitcoins without directly owning them.
Originally intended for the first fund, the intended ticker was reportedly changed by the firm in October 2021.
Unlike the firm’s existing Block Trading Fund (BTF), this newly proposed fund will offer leverage, allowing speculators to increase their exposure to the dominant cryptocurrency. BTF is an actively managed ETF available through Nasdaq that invests primarily in bitcoin futures contracts.
By this point, the market has witnessed the emergence of four different exchange-traded funds (ETFs) based on bitcoin futures. The first, known as the ProShares Bitcoin Futures ETF, was launched in October 2021.
So far, the Securities and Exchange Commission (SEC) has rejected several attempts to introduce spot Bitcoin ETFs or funds that provide direct exposure to the dominant cryptocurrency, citing concerns about possible market manipulation in the Bitcoin market.
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Digital asset manager Grayscale is currently embroiled in a lengthy legal dispute with the SEC as it seeks to convert its troubled Grayscale Bitcoin Trust (GBTC) product into a Bitcoin spot ETF. The investment firm criticized the Commission’s decision to allow the use of futures-based ETFs instead of spot ETFs, deeming it “illogical”.
In March, the judges presiding over a dispute between the two entities in the United States (US) Court of Appeals for the District of Columbia Circuit opined that the SEC “should provide a detailed explanation” regarding its understanding of the link between bitcoin futures and bitcoin’s spot price.