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Author: Admin | 2025-04-28
Of ways of tracking the performance of a digital currency. Spot ETFs directly hold the cryptocurrency, building a portfolio that replicates the performance of the digital assets it contains. Other crypto ETFs invest in futures contracts, which are agreements to buy or sell crypto at a preset date and price. Given their portfolios, these ETFs have share prices that mimic changes in the price of derivatives instead of the cryptocurrencies themselves. Therefore, the price of shares in a given cryptocurrency ETF rises and falls in line with crypto futures contract prices. Like other derivatives, synthetic cryptocurrency ETFs have an additional risk because of the lack of oversight and valuation concerns in the crypto exchanges from where the funds would be pulling crypto. While U.S. regulators refused to approve crypto ETFs for several years—the SEC turned away some 20 proposals in spot ETFs from 2018 to 2023 alone—they were readily available to investors in Europe and Canada. The SEC approved the first crypto futures ETFs for the U.S. market in October 2021 and the first spot crypto ETFs in January 2024. Cryptocurrency Futures ETFs An analysis of the ProShares Bitcoin Strategy ETF, the first crypto ETF on U.S. markets, shows how crypto futures ETFs work. The fund assigns about half of its portfolio to Chicago Mercantile Exchange (CME) bitcoin futures that expire at the end of the current month and another half to CME bitcoin futures expiring the following month. As the expiration of the contracts in the portfolio approaches, the fund rolls over its investments, selling the expiring contracts and buying contracts for the coming month. The costs associated with rolling over the contracts may account for some of the differences between the performance of the ETFs and their underlying cryptocurrencies. ProShares also has Ether Strategy ETF (EETH), an ether futures ETF like the one it provides for bitcoin. The fund tracks the price of ether with futures contracts. ProShares has ETFs that track a mix of bitcoin and ether using equal or market-cap weighting for investors looking for exposure to several crypto tokens. There are also inverse ETFs, such
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