In its latest presentation of futures-based exchange-traded funds (ETFs), Valkyrie Funds uses one of the most popular memes in the financial community on Twitter, known as “fintwit,” to capture attention and interest.
May 16the investment firm filed a new application for an ETF based on Bitcoin (BTC) futures to be listed on the Nasdaq under the ticker symbol “BTFD.”
Both of Valkyrie’s Bitcoin-focused funds have no direct exposure to the cryptocurrency itself; instead, they invest in Bitcoin futures traded on the Chicago Mercantile Exchange. Bitcoin futures are financial contracts that allow investors to speculate on future Bitcoin price movements. These contracts bind the buyer to buy or the seller to sell Bitcoin at a predetermined price on a specified future date. Unlike Bitcoin trading, which involves owning and holding the digital asset itself, futures contracts allow traders to speculate on the price of BTC without directly owning it.
Initially intended for the first fund, the suggestive ticker would have been modified by the firm in October 2021.
In contrast to the firm’s existing block trading facility (BTF) fund, this newly proposed fund will offer leverage, allowing speculators to increase their exposure to the dominant cryptocurrency. A BTF is an actively managed ETF available through Nasdaq that invests primarily in Bitcoin futures contracts.
Up to this point, the market has seen the introduction of four different ETFs based on Bitcoin futures. First, ProShares Bitcoin Futures ETF, launched in October 2021.
Until now, the US Securities and Exchange Commission (SEC) has denied several attempts to introduce various Bitcoin spot ETFs or funds that provide direct exposure to cryptocurrency, citing concerns about potential Bitcoin market manipulation.
Digital asset manager Grayscale is currently involved in a protracted legal dispute with the SEC as it seeks to transform its Grayscale Bitcoin Trust into a Bitcoin spot ETF. The investment firm criticized the SEC’s decision to authorize futures-based ETFs instead of spot ETFs, calling it “illogical.”
In March, the judges presiding over the dispute between the two entities in the US Circuit Court of Appeals for the District of Columbia expressed the view that the SEC “must provide a detailed explanation” of its understanding of the connection between futures and the spot price of Bitcoin.
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