Despite the hoopla over the debut of the first Bitcoin-linked ETF, tried-and-true crypto enthusiasts aren’t planning on buying shares anytime soon.
The launch of the ProShares Bitcoin Strategy exchange-traded fund on Tuesday was a milestone for the asset-management industry, integrating Bitcoin further into mainstream finance. Wealth-management companies that didn’t offer clients the ability to buy crypto now could provide a way to invest in the next best thing.
Sure, it was a big step forward for Wall Street. For many Bitcoin believers who have traded crypto for years, it was nice to see, but the whole point is to bypass Wall Street and democratize the finance industry.
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“We’re definitely most concerned with financial independence and being your own bank, and that’s what Bitcoin allows,” said Ian Gaines, a 29-year-old media director at the Black Bitcoin Billionaire, an educational platform for crypto investors. “The ETF is just a paper claim to that asset.”
Read More: Why You’re Probably Better Off Buying Bitcoin Than a Futures ETF
Although BITO had the second best ETF debut in the industry’s history — drawing $570 million — retail traders gave it a more muted response, according to Vanda Research. The fund attracted $7.68 million in cash from individuals, who preferred to buy Apple Inc., Alibaba Group Holding Ltd. and clean energy stocks.
Meanwhile, Bitcoin’s price hit an all-time high the day after the ETF’s debut in what one crypto industry executive called a “validating moment.”
While the new ETF product makes it possible to buy Bitcoin exposure through brokerage accounts like those at Fidelity and Vanguard, it tracks futures — contracts to buy or sell an asset at a specified price at a later date — instead of the spot price of Bitcoin.
“There seems to be no reason to invest in a Bitcoin ETF over Bitcoin itself,” said Jake Lubin, a 19-year-old student at Ohio State University. “I feel like the ETF kind of defeats the fundamental purpose of Bitcoin — ownership.”
The ETF could be seen as a product for those who were reluctant to dive head-first into crypto, said Lindsey Bell, Ally Invest’s chief investment strategist.
“Crypto has been exciting for a while, but some have been hesitant to buy in because of the lack of transparency,” she said. “Others have been skeptical about the mechanics of buying and selling pure coins. The advent of Bitcoin futures ETFs could serve the interest of these investors without requiring the holding or exchange of actual cryptocurrencies.”
For Chuck Roehrig, who’s been investing in Bitcoin since 2019, that the new ETF is futures-based means he won’t be buying. He’d rather get exposure to crypto through the actual coins. In his retirement accounts, which don’t allow cryptocurrencies, he invests in the Grayscale Bitcoin Trust (GBTC) and Microstrategy Inc., the tech company that holds more than 114,000 Bitcoins on its balance sheet.
“The new ETFs for futures, I look at those as just investing in paper,” said Roehrig, 51, who lives in Dallas and manages a tech firm. “It’s going to raise the entire visibility of Bitcoin, but it’s not going to be something I invest in.”
He joins the likes of Ark Investment Management’s Cathie Wood who said she didn’t buy the BITO fund on its first day trading because she wants to better understand the tax ramifications of the ETF’s futures exposures first.
More Bitcoin ETFs are coming down the pipeline, with Valkyrie Investments and VanEck Associates planning to roll out offerings in a matter of days.
