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The VanEck Bitcoin Strategy ETF (XBTF), which tracks the price of Bitcoin futures, launched today amid market turbulence that saw Bitcoin’s price dip below $60,000 for the first time in two weeks.
The price of Bitcoin recovered slightly, reaching $59,966 by the time traditional markets closed at 4pm ET.
In that time, VanEck’s XBTF saw 38,398 shares traded on its first day, ending at $59.73 per share–just below its $60 per share open. The ETF had $9.6 million in assets under management at close, according to VanEck.
It’s a bittersweet debut for VanEck, which had its spot market Bitcoin ETF application denied by the SEC on Friday after the regulator cited lingering concerns about “fraud and manipulation” in the cryptocurrency market. The application had been waiting on a decision from the regulator since 2017.
“Obviously, we were disappointed to hear about the decision on the spot physical product and we still continue to view that as the superior product,” Kyle DaCruz, director of digital asset products at VanEck, told Decrypt on Tuesday afternoon. “However, in light of that decision, we felt it important–and frankly we’re excited–to bring to market Bitcoin-linked exposure to investors in a regulated exchange traded fund.”
Whereas spot prices have to do with an asset’s real-time value, futures contracts are agreements to buy the asset later, sometimes months later, at a locked-in price. DaCruz added that VanEck does plan to keep working towards bringing a spot product to market, but couldn’t speculate on when that would happen.
For now, its Bitcoin futures ETF has two competitors to contend with.
The Proshares Bitcoin Strategy ETF (BITO), the first Bitcoin futures ETF to gain SEC approval, accumulated a record-setting $1.1 billion in its first two days of trading and has since held steady at $1.05 billion. The Valkyrie Bitcoin Strategy ETF (BTF), which launched three days later, has about $50 million under management.
First Bitcoin Futures ETF Trades Nearly $1 Billion in One Day
DaCruz said the VanEck ETF has two advantages over its peers: Lower fees, charging 0.65 basis points compared to the 0.95 charged by BITO and BTF, and a C-Corp structure that allows it to carry forward losses. That means if the ETF ends the year having suffered losses, they can be carried forward and deducted from the following year’s profits, meaning that investors can use past losses to reduce the taxes they pay on future gains.
He was careful to add that doesn’t necessarily make a C-Corp the right structure for all ETFs. Most are structured as regulated investment companies, or RICs. Rather, VanEck thinks it’s a good fit for products tied to Bitcoin, in particular, because of the cryptocurrency’s volatility.
“The ability to treat losses and carry those forward and backwards is instrumental in this asset class,” DaCruz said. “And so when a RIC has a down year, there’s nothing you can do with those losses. But a C-Corp can carry those losses forward five years in the future or three years back to offset gains.”
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.