Athanasios Psarofagis, an analyst at Bloomberg ETFs, estimates that the fund’s annual cost of renewing shares is 11 percent; This means that traders’ profits in trading these funds over a one-year period are 11 percent lower than similar transactions in instant markets.
to the Report In a recent tweet, YouTube quoted Sarafigos as saying that the annual cost of renewing shares in Bitcoin futures ETFs is 11 percent. Roll cost is the amount of commission that a shareholder pays to the fund operator.
This cost is generally higher for future Bitcoin ETFs than for current bitcoin-backed ETFs. Due to the infrastructure of the ProShares exchange-traded fund, the company is forced to close futures contracts for the month from the last day of the month and buy next month’s contracts. This entails additional costs, known as “transfer costs”.
Futures contract at a lower price than futures with a higher maturity as they approach their maturity date; This allows all ETFs that work with futures contracts to be bought at a high price and sold at a lower price than assets on the instant market.
The cost of renewal is actually the difference between the daily closing of futures contracts. The Bloomberg analyst also obtained this number by calculating the difference between the November and December futures contracts.
Generally, buying shares in Bitcoin-traded funds based on derivatives tools can be a problem for investors. On the other hand, the regulated context of ETFs allows large investors to take advantage of its disadvantages. In addition, these problems sometimes cause the investor to make a loss immediately after entering the market.
The solution to this problem is to wait for the approval of ETFs backed by physical bitcoins; In this case, there will be no more news of the current problems.
The US Securities and Exchange Commission has not yet authorized such ETFs. The commission says the unregulated nature of digital currencies is one of the obstacles to the approval of instant ETFs.