Hello everyone again! I am flooded. There is at least 3 inches of water in my basement in New Jersey. All thanks to what the media (hey, that’s me) refer to as the remains of Hurricane Ida.
Anyway, when I was knee-deep in the water at 1 a.m. Eastern Time on Thursday as I was doing the Sisyphean chore of scooping bilge out of my basement, I thought of the spate of ETF applications for Bitcoin-backed products that Gary Gensler’s Securities and Exchange Commission wades through.
We spoke to Will Rhind from GraniteShares, who filed an application for a long and short Bitcoin ETF back in 2017, but this time takes a tough pass. I leave it to you to judge whether Rhind’s argument is sound. Rhind is the founder and Chief Executive Officer of the ETF issuer GraniteShares in New York, which was founded in 2016.
You know what to do: Send tips or feedback and find me on Twitter @mdecambre to tell me what to jump at.
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Why do we need a Bitcoin ETF
There is a growing surge in Bitcoin ETF applications for a futures-based product after the SEC announced that it would likely approve a Bitcoin BTCUSD, + 2.64% ETF holding Bitcoin futures BTC.1, + 2.88%,
but the crypto itself. SEC chairman Gensler sees futures as a more regulated area of the market where the guard rails of investors are, in his opinion, more solid.
Futures are usually a bet on an underlying commodity like oil CL.1, + 2.30%,
or Gold GC00, -0.26% and there is a growing bitcoin futures market operated by the CME Group. CME, -1.00% Bitcoin futures are traded separately from the underlying asset and the values do not always match.
Rhind told ETF Wrap during a phone interview on Wednesday that there may not be any material reason for the current rigmarole to be the first to offer a Bitcoin-backed ETF beyond the look.
As early as 2017, Rhind said that the thesis for the provision of a Bitcoin ETF was clear.
“We felt Bitcoin and others [crypto] Currencies seemed like an asset that people wanted to trade in and they couldn’t do it that easily, ”he said.
That dynamic has changed significantly in the past three years, he argues, as access is + 0.13% easier for the average investor due to platforms like Coinbase Global COIN, + 0.88% and other platforms like PayPal PYPL, + 0.13%.,
that offer exposure to Bitcoin.
“The best expression of an ETF has always been market access,” he said. “It can get easier in a bottle when you combine a real need … there is a need for a certain class and [the ETF]“Addresses the need and releases value.
“But that is no longer a market access story,” said Rhind. “People can already get access.”
The GraniteShares pro also said that tax benefits that could be gained from a stock ETF would likely not be at play for a Bitcoin futures ETF.
“Chances are the tax treatment is the same as if you owned the underlying futures directly,” he said.
John Hyland, CFA and director of Matthews International, told ETF.com that so-called roll costs at the expiration of futures contracts could also introduce peculiarities in ETF prices and trading.
“Bitcoin futures will likely always find themselves in mild contango, much like gold futures – a small but unwelcome result,” Hyland told ETF.com in an interview. Contango is a state where prices are higher for longer term contracts.
“Even if a Bitcoin futures fund is small and has no problem trading its futures, it will likely perform below the spot price every year using futures,” Hyland said in an interview with ETF.com.
All of this is worth considering in the midst of all the hustle and bustle surrounding a Bitcoin ETF. Is it worth it even if you are admitted by October?
Some crypto purists also like to point out the paradox of owning a decentralized asset like Bitcoin or Ether ETHUSD, + 1.37%,
on a central platform, like a fund that is traded on a public exchange.
The good and the bad
|Last week’s top 5 winners||%To return|
Global X Uranium ETF URA, + 4.82%
KraneShares CSI China Internet ETF KWEB, -1.22%
Emerging Markets Internet & E-Commerce ETF EMQQ, -0.57%
Global X MSCI China Consumer Discretionary ETF CHIQ, -0.96%
iShares MSCI China ETF MCHI, -0.60%
Source: FactSet, until Wednesday September 1st, excluding ETNs and leverage products. Includes ETFs traded by NYSE, Nasdaq, and Cboe of $ 500 million or more
Picture of the week
Cboe Global Markets and FINRA
Data from Cboe Global Markets shows that the meme stock phenomenon that exploded earlier this year amid the frenzied appetite for AMC Entertainment Holdings AMC, +1.63% and GameStop Corp. GME, -0.30% has come into focus.,
has been around for much longer.
Cboe’s team, including summer intern Jeff Nguyen, noted that the meme-share phenomenon, characterized by stocks moving on social mentions and idea collaboration across social platforms rather than fundamentals, has been going on since at least 2019 (see attached Graphic). . The group created a program that would search Reddit’s popular r / WallStreetBets forum for stock market tickers and total the number of mentions for each ticker per day.
“We then examined the 15 most talked about social media meme stocks from January 2019 to date,” and the researchers put the total trading volume of each stock versus the total composite volume (TCV) to see if a significant trend was underway.
let it flow
The exchange-traded funds industry had net inflows of $ 596 billion from August to August, extending its record year, CFRA said.
According to Todd Rosenbluth, Head of ETF and Investment Fund Research at CFRA, global equity and US ETFs with iShares Core MSCI Emerging Markets ETF IEMG and Vanguard S&P 500 contributed the most to these inflows in the first eight months of the Year 2021 at ETF VOO, + 0.31% among the leaders.
The good folks at Bespoke Investment Group have a helpful spreadsheet that provides a snapshot of how some US and international ETFs are performing each month.
Tailored investment group
“The Nasdaq-100 QQQ, + 0.04%, had the best August of the major US index ETFs, while the Dow 30 DIA, + 0.43%, gained the least. The energy sector XLE was the only sector in the red at + 3.18%, while every other sector ETF rose by more than 1%, ”the researchers write.