An Analysis of the Differences Between BTC Spot and ETF

Kahn332

The Differences Between BTC Spot and ETF – A Guide to 3 Types of BTC ETFs & 3 Types of BTC Futures with an Infographic

Let's start with a brief overview of BTC futures. Currently, the mainstream BTC futures include three types:

Perpetual futures on platforms like Binance and OKEx.
CME (Chicago Mercantile Exchange) BTC futures, settled in cash, similar to the first type except for the settlement method.
BAKKT's BTC futures, settled in spot.
Regarding BTC Futures ETF:

Most BTC Futures ETFs are currently based on CME's BTC futures.

About ETF:

ETF stands for Exchange Traded Fund, representing a fund traded on an exchange. ETFs can be created based on a basket of assets or a specific asset, referred to as the underlying or underlying assets. ETFs represent partial ownership of the underlying assets, allowing for redemption, i.e., exchanging the ETF for an equivalent value of underlying assets. Consequently, ETF products cannot be issued out of thin air; issuers need to hold an equivalent value of underlying assets to issue an ETF.

3 Types of BTC ETFs:

ETF based on BTC spot:
Many believe that BTC spot ETFs are positive, and this viewpoint is correct. However, some think that the delay in approving spot ETFs compared to futures ETFs is due to regulatory reasons. When a BTC spot ETF is approved, it indicates regulatory recognition, thus benefiting BTC. While this perspective has merit, it may not be comprehensive.
Institutions like BlackRock issuing spot ETFs could be a significant boost for BTC. Issuing ETFs requires holding an equivalent value of underlying assets. Launching a BTC spot ETF necessitates holding an equivalent value of BTC spot. Therefore:
BTC Spot ETF Market = BTC Spot Market
This means global financial institutions like BlackRock are likely to attract new BTC investors who prefer or are restricted by regulatory conditions to buy institutional ETF products. The greater the market demand for BTC spot ETFs, the more BTC spot these institutions need to hold. Consequently, large financial institutions issuing BTC spot ETFs can bring incremental funds and a broader international market to BTC spot.

The BTC spot ETF market in Hong Kong can similarly expand the Asian market for BTC.

ETF based on BTC futures:
Currently, several financial institutions have issued BTC futures ETF products, but these products are based on CME's cash-settled BTC futures. Therefore, the BTC futures ETF market does not bring incremental funds to the BTC spot market.

Cash-based BTC ETF:
Cash-based BTC ETFs involve issuers holding cash to issue BTC ETFs and redeeming cash upon redemption. Naturally, this does not introduce funds into the BTC spot market.

Indra55

Let's see what different aspects there are.

Jafar224

It's still quite diverse with various differences.