ProShares bitcoin futures ETF 'fatally flawed': Coindesk managing director



Jodie Gunzberg, Coindesk Indexes managing director, joins ‘Power Lunch’ to discuss the new ProShares bitcoin futures ETF that debuts Tuesday. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

The first bitcoin-linked exchange-traded fund will make its debut officially on Tuesday.

The much-anticipated ETF from ProShares, which will track the bitcoin futures market, will begin trading Tuesday on the NYSE under the ticker “BITO,” the company confirmed.


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“We believe a multitude of investors have been eagerly awaiting the launch of a bitcoin-linked ETF after years of efforts to launch one,” ProShares CEO Michael L. Sapir said in a statement Monday. “BITO will open up exposure to bitcoin to a large segment of investors who have a brokerage account and are comfortable buying stocks and ETFs, but do not desire to go through the hassle and learning curve of establishing another account with a cryptocurrency provider … or are concerned that these providers may be unregulated and subject to security risks.”

The price of bitcoin climbed more than 2% on Monday to $62,041.84, according to Coin Metrics. Many investors are watching to see if bitcoin will jump above $64,800 this week to reach a new all-time high.

Bitcoin futures ETFs will also be a big regulatory feat for the still young crypto industry, which has long struggled to cement crypto’s place in the highly regulated financial world. Four more ETF providers are hoping to move forward with trading this month. A second futures-based ETF could come as soon as this week.

“This will be probably the biggest endorsement from the SEC for crypto,” said Ian Balina, CEO of the data and analytics firm Token Metrics, who also noted that regulators globally have been at odds with the crypto industry for years and “impeded the acceptance of crypto” by retail investors. “This will be a floodgate of new capital and new people into the space.”

This crop of ETFs falls short of what the crypto industry ultimately wants: funds that invest directly in bitcoin.

Since 2017 at least 10 asset managers have sought approval to launch spot bitcoin ETFs, which would give investors a vehicle through which to buy bitcoin itself, rather than derivatives tied to it. They were all rejected by the Securities and Exchange Commission, then headed by Jay Clayton, which maintained none of them were able to show the market is resistant to manipulation. In an August speech, SEC Chair Gary Gensler said he would favor investment vehicles that include futures, and a rush of bitcoin futures ETF applications followed.

Investing in a futures-based ETF would not be the same thing as investing directly in bitcoin. A futures contract is an agreement to buy or sell an asset at a future date at an agreed-upon price. A futures-based ETF tracks cash-settled futures contracts, not the price of the asset itself.

“The all-in cost of a futures-based ETF could be in the 5% to 10% range once you take into account the annualized roll yield,” said Matt Hougan, chief investment officer at Bitwise Asset Management, which has its own application for a bitcoin futures ETF in line at the SEC.

Annualized roll yield is the return a futures investor captures on top of the change in the price of the underlying asset.

“Futures-based ETFs are also more confusing,” Hougan added. “They have challenges like position limit and official dilution, and they can’t get 100% exposure to the futures market.”

There are four bitcoin futures ETFs lined up for review in October, from ProShares, Valkyrie, Invesco and Van Eck. They’ll be allowed to move forward and list 75 days after their paperwork was filed if the SEC doesn’t intervene within that period.

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47 thoughts on “ProShares bitcoin futures ETF 'fatally flawed': Coindesk managing director

  • January 15, 2022 at 8:23 pm
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    These people only want capital gains for themselves.

    Reply
  • January 15, 2022 at 8:23 pm
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    Centralized scams.

    Reply
  • January 15, 2022 at 8:23 pm
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    Canada has better ETFs for BC and Eth that are backed by the actual cryptos. Rolling futures contracts suffers from contango

    Reply
  • January 15, 2022 at 8:23 pm
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    I'm not really opportune the gift of time, I'm currently retired and I'd love to know how to invest progressively. I've read about people growing up to $75K in a space of 3 -5 months and I'd really appreciate tips on achieving that and also how to invest for senior citizens.

    Reply
  • January 15, 2022 at 8:23 pm
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    I'm actually tired of working about stocks…it's driving me nuts these days, I think crypto investment is far better than stock..

    Reply
  • January 15, 2022 at 8:23 pm
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    Selling? Bitcoin is a long term HODL play, buy the etf hold it, thats it. Go back, buy BTC hold and accumulate. This ETF is a play on the speculation and success of BTC. im in, this is FUD

    Reply
  • January 15, 2022 at 8:23 pm
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    The fact that this guy is on CNBC and doesn't know what contango is 😂

    Reply
  • January 15, 2022 at 8:23 pm
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    If I'm not mistaken, this product is similar to USO

    Reply
  • January 15, 2022 at 8:23 pm
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    Venturing into the trading world without the help of a proffesionl trader and expecting profit is like turing water into wine,you would need a miracle, thats why i trade with Mrs Sonia Dickson, her skills set exceptional?

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  • January 15, 2022 at 8:23 pm
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    Polylastic 💎🙌🏻 Hidden gem

    Reply
  • January 15, 2022 at 8:23 pm
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    I’m not a Bitcoin bull, but the whole thesis runs contrary to owning an ETF vs buying actual Bitcoin.

    You’re either buying Bitcoin because it’s the future of money in which case you want the actual money. If you believe in decentralized finance then ETFs are hardly decentralized.

    or you’re buying it because you have no faith in the dollar, in which case if the dollar goes to hell and we’re living in a Mad Max post apocalyptic hellscape that would ensue and your ETF would be useless versus having a hardware wallet with actual Bitcoin (same goes for gold btw)

    Reply
  • January 15, 2022 at 8:23 pm
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    All futures markets should be illegal. Nothing but an organized crime style casino. There is no need to bet on the "future" price of Bitcoin. All is known NOW. How many coins, inflation rate, when the last coin will be mined. etc. This is just designed to take peoples money. There should be a spot based ETF instead and the SEC knows it. Just Wall Street crooks being Wall Street crooks.

    Reply
  • January 15, 2022 at 8:23 pm
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    INTV – Integrated Ventures Inc.
    A sleeping giant

    Reply
  • January 15, 2022 at 8:23 pm
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    any Air Coins, no thank you.

    Reply
  • January 15, 2022 at 8:23 pm
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    I do not think that this ETF is worth it and I agree that it is fatally flawed. In fact, I just did a full review on this ETF on my channel for those of you that are interested!

    Reply
  • January 15, 2022 at 8:23 pm
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    NOBODY BECOMES A MILLIONAIRE OR A BILLIONAIRE BY WORKING FOR OTHERS AND DEPENDING ON THEM, GOOD INVESTMENT BRING MILLIONS OF DOLLARS, AND CONSISTENCY BRING BILLIONS, THE MARKET IS ALL ABOUT BTC AT THE MOMENT NOW…………..

    Reply
  • January 15, 2022 at 8:23 pm
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    Just buy the underlying btc.

    Reply
  • January 15, 2022 at 8:23 pm
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  • January 15, 2022 at 8:23 pm
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    if the 🔌world has a person like the 🔌world would have been a battle place to thanks them they really changed my life completely🙏🙏🙏

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  • January 15, 2022 at 8:23 pm
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    Yo listen to these 2 fools if y'all want. They are the same ones that said that this coin wouldn't go up this high

    Reply
  • January 15, 2022 at 8:23 pm
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    Bitcoin has no future but bubbles! The value of Bitcoin is zero!

    Reply
  • January 15, 2022 at 8:23 pm
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    Bitcoin is a Disaster!

    Reply
  • January 15, 2022 at 8:23 pm
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    Mrs Rose Robert and her method works like magic I keep earning single week with new strategy

    Reply
  • January 15, 2022 at 8:23 pm
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    I dont think different futures expiries price based on expectation relative to each other. They price based on interst rate and in case of physical commodities, interest rate and storage costs. For equity index, there is dividends which lowers the cost. She is not entirely wrong, but a bit coin future expiring in Sep relative to Dec should only be different by a factor or interest rates because its purely a financial asset (or speculative instrument). Since rates are positive, Dec future would be more expensive than Sep future. Reason is, the seller of the Future needs to buy bitcoin (to hedge) and then hold it for you for 3 months and pay interest. The hedger (bank that makes markets) dont take a view one way or the other. They facilitate the transaction.

    So much ignorance. Even MD at Coindesk has no f'ing clue how Futures work!

    Reply
  • January 15, 2022 at 8:23 pm
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    I HAVE BEEN MAKING LOSSES TRADING MYSELE…I THOUGHT TRADING ON DEMO ACCOUNT IS JUST LIKE TRADING THE REAL MARKET… CAN ANYONE HELP ME OUT OR AT LEAST ADVICE ME ON WHAT TO DO.

    Reply
  • January 15, 2022 at 8:23 pm
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    Investor protection = lose money on an appreciating asset through fees & contango roll. Brilliant. Another example of, "I'm from the government and I'm here to help."

    Reply
  • January 15, 2022 at 8:23 pm
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    We don't need boomers to tell us how our crypto works

    Reply
  • January 15, 2022 at 8:23 pm
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    (ELON) COIN IS MAKING MILLIONAIRES!!…$$$

    Reply
  • January 15, 2022 at 8:23 pm
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    What’s the fuzz? BITO isn’t the first ETF pegged to a futures contract, and people have no problem trading those. Also when you consider the crazy spreads on the spot market plus the fees that are as high as 1% of purchase price round trip(and that’s on trading exchanges, fees can be even higher on other platforms), plus the fees to transfer crypto in and out of exchanges and wallets… I think BITO is fine for me, the spread on it is just $.01 as it started trading.

    Reply
  • January 15, 2022 at 8:23 pm
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    Her logic is oh-so-defective. ETF is not meant to be about coin-purchasing. Not 1 in 10,000 investors thinks they're getting coins. People who USED to be in significant position cry out to be noticed.
    — Impelled to rate this video a 0 on scale of 1 to 10. 🙂 (Profits on correctly-chosen PUTS and CALLS is a mulltiple of profit on direct ownership of the underlying asset). Perhaps she's involuntarily celibate, hence, the yelling for attention with her undiluted blatherskite.

    Reply
  • January 15, 2022 at 8:23 pm
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    I think the point is missed. The point is Bitcoin has penetrated the established and ancient financial system. Been welcomed by regulators of the worlds largest and most diverse and advanced economy. No longer out there it is part of the system. Like a virus, it will spread throughout the financial systems of all nations. You will see every major country, bank and corporation getting it on their balance sheet. As it is global (let me say this again GLOBAL) the reach is the planet, not the USA (in fact it can reach further to Space itself – Currency and Gold can't do that). That is why you want the base asset and why this ETF is still worth investing in should you have rules regarding investing in raw crypto. It is the start. The door has been opened. The firewall is penetrated. Here we go. Will you be the arrogant idiot left holding tech stock gold and fiat alone in your portfolio? Or will you see the puck move and chase it down. 5% of everyone's portfolio should be Bitcoin.

    Reply
  • January 15, 2022 at 8:23 pm
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    Just buy the real thing!

    Reply
  • January 15, 2022 at 8:23 pm
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    Reading comments below, most people don't understand what she is saying. She brings out a great point about the weakness of BITO, the rolling over to higher prices futures contracts. That will not be as bad if actual Bitcoin prices are going up, even it will decrease the total return compared to owning the actual Bitcoin, minus storage/security expenses. However, she is confused about the term contango vs normal future curve, and she should not be using the term contango. Rising future expected spot prices reflected in a rising future curve is a normal future curve, not a contango. A contango is a rising future curve above the respective expected future spot prices. She is not alone; many people use the term contango incorrectly.

    Reply
  • January 15, 2022 at 8:23 pm
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    MRS CHARLOTTE IS LEGIT AND HER METHOD WORKS LIKE MAGIC I KEEP ON EARNING EVERY SINGLE WEEK WITH HER NEW STRATEGY

    Reply
  • January 15, 2022 at 8:23 pm
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    What she is saying makes no sense your supposed to use futures to hedge you posistion in spot. So the majority who use futures more than likely hold btc anyway.

    Reply
  • January 15, 2022 at 8:23 pm
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    All you need to go broke is a power outage!

    Reply
  • January 15, 2022 at 8:23 pm
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    Real ETFs backed by Bitcoin not paper are available in Canada

    Reply
  • January 15, 2022 at 8:23 pm
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    It's a dud….. contango nightmare

    Reply
  • January 15, 2022 at 8:23 pm
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    Not your keys? Not your coins.

    Reply
  • January 15, 2022 at 8:23 pm
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    I traded oil for decades. She is "talking her book" … future eventually will be the more traded platform just like oil.
    She's completely wrong … we stored oil in tanks and ships all over the world and managed this as inventories which this techny totally misses

    Reply
  • January 15, 2022 at 8:23 pm
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    Better to buy Bitcoin directly

    Reply
  • January 15, 2022 at 8:23 pm
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    What is app name in ETF

    Reply
  • January 15, 2022 at 8:23 pm
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    She’s gorgeous.

    Reply
  • January 15, 2022 at 8:23 pm
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  • January 15, 2022 at 8:23 pm
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  • January 15, 2022 at 8:23 pm
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    People has increased their bids in hopes of making huge gain from the rise but as we can see now the markt is very unstable , the truth is that you can always make more profit from tradn rather than just hodlin and waiting for the price of BTC to skyrocket. Indeed its a tough decision for both old and newbies whose intensions are just to hodl and sell but rather the potentials of tradn Btc would allow you grow your Btc not minding the present price chart and also saving your ass from any future deep that may occur . I started tradn with Daniel Wríght since last year and till date have made over 14 Btc even with the ups and downs since the journey. With Daniel’s help I no longer have to worry about the rise and dip of Bitcoin ,you can reach Daniel at :Te lg: rm @Danlelwrlghtfx* to stack up more.

    Reply
  • January 15, 2022 at 8:23 pm
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    I love your video at large but i will advice everybody who is into cryptos to Stick with ETH and BTC as much as you can guys. If everyone sells when it starts to fall, which at one point it will, the dream may be lost because of it being too volatile for companies to get behind

    Reply

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