Article: New York Stock Exchange Moves on Bitcoin ETFs

[ahmadoo]

The New York Stock Exchange has filed for permission to launch a number of Bitcoin-related exchange-traded funds (ETF) just one week into 2018.

As reported by BusinessInsider, a filing sent to the United States Securities and Exchange Commission shows that the exchange intends to launch five different ETFs offering ‘bull and bear’ futures contracts on the Arca stock exchange.

These EFTs will be linked to the price of Bitcoin futures listed on the CME and CBOE exchanges, which launched Bitcoin futures contracts in December 2017:

“The target benchmark’s value will be calculated as the last sale price published by the CME or the CBOE or any other US exchange that subsequently trades bitcoin futures contracts on or before 11 a.m. E.T.”

Bull Funds
The three ‘Bull Funds’ are categorized as 1.25X, 1.5X and 2X, offering 100 percent, 150 percent and 200 percent returns on the given contract.

As stated in the document sent to the SEC, the funds are not intended to be traded any longer than a day – and offer percentage returns based on the given contract entered into:

“According to the Registration Statement, the 1.25X Bull Fund, 1.5X Bull Fund and 2X Bull Fund seeks daily leveraged investment results (before fees and expenses) that correlate positively to either 125 percent, 150 percent or 200 percent the daily return of the target benchmark.”

However, investors stand to a chance of facing the same multipliers in loses, should the market move against their contracts:

“Conversely, its value on a given day (before fees and expenses) should lose approximately 1.25 times, 1.5 times or 2 times, as applicable, as much on a percentage basis as the level of the target benchmark when the benchmark declines.”

Bear Funds
As the name suggests, the ‘Bears Funds’ allow investors the chance to leverage against a decline in the value of Bitcoin. The two funds offered are 1X and 2X, offering 100 percent and 200 percent gains should the contract meet its target on the given day of trading.

Once again, should the benchmark rise in value, Bear Fund investors stand to suffer loses compounded by the multiplier (1X or 2X) they’ve agreed to, as per the description of the 2X Bear Fund:

“If the 2X Bear Fund is successful in meeting its investment objective, its value on a given day should gain approximately two times as much on a percentage basis as the level of the target benchmark when the target benchmark declines. Conversely, its value on a given day should lose approximately two times as much on a percentage basis as the level of the target benchmark when the target benchmark rises.”

Keeping up with the game
Should the NYSE be permitted to launch these ETFs, they will be the third American exchange to offer Bitcoin futures contracts. CME and CBOE have been trading futures since December.

Wasting no time in sending their application to the SEC, this move shows that there is plenty of interest in Bitcoin by Wall Street money.

While the likes of Merrill Lynch have denied its financial advisors from offering clients Bitcoin-related investments, exchanges are looking to set up of various offerings.

Once a number of ETFs and trading options have been available for a while, there will be more information on how well these options are trading. Given that knowledge, could we see a change in sentiment by financial institutions whose clients are looking to enter the cryptocurrency market?

[QuestionAuthority]

They won’t be selling bitcoin, they’ll be selling futures. It’s a horse or grayhound race track. When you bet on a pony at the track you’re not buying a pony and your bet doesn’t make the horse owner any more wealthy. It just puts money in the pocket of the racetrack owner and the government where the track is located.

[squatter]

They won’t be selling bitcoin, they’ll be selling futures. It’s a horse or grayhound race track. When you bet on a pony at the track you’re not buying a pony and your bet doesn’t make the horse owner any more wealthy. It just puts money in the pocket of the racetrack owner and the government where the track is located.

I'm not sure I follow. How often do you see gold and oil ETFs diverge significantly from the underlying asset? You can trade the swings just like any other swing trader in the spot markets, but the third party exchange risk is much lower. Sure, there are trading commissions, but it's customary in the regulated market to charge flat fees, so it'll be much cheaper to trade than the underlying spot markets. And yes, there are tax revenues, but what else would you expect here?

Bull Funds
The three ‘Bull Funds’ are categorized as 1.25X, 1.5X and 2X, offering 100 percent, 150 percent and 200 percent returns on the given contract.

Bear Funds
As the name suggests, the ‘Bears Funds’ allow investors the chance to leverage against a decline in the value of Bitcoin. The two funds offered are 1X and 2X, offering 100 percent and 200 percent gains should the contract meet its target on the given day of trading.

Too bad, no VelocityShares equivalent. A sweet long term 3x entry (tax deferred via retirement account) could be epic.

[QuestionAuthority]

They won’t be selling bitcoin, they’ll be selling futures. It’s a horse or grayhound race track. When you bet on a pony at the track you’re not buying a pony and your bet doesn’t make the horse owner any more wealthy. It just puts money in the pocket of the racetrack owner and the government where the track is located.

I'm not sure I follow. How often do you see gold and oil ETFs diverge significantly from the underlying asset? You can trade the swings just like any other swing trader in the spot markets, but the third party exchange risk is much lower. Sure, there are trading commissions, but it's customary in the regulated market to charge flat fees, so it'll be much cheaper to trade than the underlying spot markets. And yes, there are tax revenues, but what else would you expect here?

Bull Funds
The three ‘Bull Funds’ are categorized as 1.25X, 1.5X and 2X, offering 100 percent, 150 percent and 200 percent returns on the given contract.

Bear Funds
As the name suggests, the ‘Bears Funds’ allow investors the chance to leverage against a decline in the value of Bitcoin. The two funds offered are 1X and 2X, offering 100 percent and 200 percent gains should the contract meet its target on the given day of trading.

Too bad, no VelocityShares equivalent. A sweet long term 3x entry (tax deferred via retirement account) could be epic.

My point is that it will do nothing for bitcoin. Futures trading is a parasite on any industry involved.

[awilliams]

What about what Polymath is doing with their platform? They're the ones essentially bridging wall street to blockchain. These companies can issue security tokens through them. https://polymath.network/

[devarajdp]

Bitcoin is one of the wildest trades in the market today, delivering sharp gains and losses that defy explanation. Trading has been expensive and difficult, with brokerages offering limited access and specialist websites like Coinbase reporting regular outages. Top voices on markets from economist Robert Shiller to JPMorgan Chase & Co CEO Jamie Dimon have warned people off buying bitcoin.

Yet asset managers have been racing to design more than 10 proposals for bitcoin funds that are currently before U.S. regulators.

New ETFs could make access to bitcoin easier and, in the case of the Direxion product, mean bigger stakes for investors, with a 25 percent gain or loss on one day doubled to 50 percent.

[QuestionAuthority]

Bitcoin is one of the wildest trades in the market today, delivering sharp gains and losses that defy explanation. Trading has been expensive and difficult, with brokerages offering limited access and specialist websites like Coinbase reporting regular outages. Top voices on markets from economist Robert Shiller to JPMorgan Chase & Co CEO Jamie Dimon have warned people off buying bitcoin.

Yet asset managers have been racing to design more than 10 proposals for bitcoin funds that are currently before U.S. regulators.

New ETFs could make access to bitcoin easier and, in the case of the Direxion product, mean bigger stakes for investors, with a 25 percent gain or loss on one day doubled to 50 percent.

What a load of crap. It doesn’t “defy explanation”. It’s clearly explained in this thread: https://bitcointalk.org/index.php?topic=2705112.msg27687907#msg27687907