Bitcoin ETF versus a Bitcoin Futures ETF .

In order to understand why the title is true, you need to understand what an Bitcoin ETF is, and what a Bitcoin Futures ETF is , and then you understand why one is bad for investors.

What is a Bitcoin Futures ETF.

A Bitcoin Futures ETF allows you to buy futures contracts on the price of Bitcoin.
It’s important to understand that buying a futures contract from a Bitcoin Futures ETF doesn’t allow you to own Bitcoin, you own a Futures Contract, which exists for a short period of time.
And these futures contracts expire worthless, so you are buying and selling them basically every month, as that is the nature of this type of investment.
They are very similar to stock options in that regard.
They are contracts which control assets, they exist for a fixed time period and they expire worthless.
Furthermore, due to the fact futures contracts expire worthless monthly , the investor has to sell them before they expire, if they are going to be profitable or lose all the invested money. So you need to buy and sell them every month, hoping to buy the dip in price and sell on the increase in price, along with paying transaction fees on both buys and sells, it is normal for the average, or more correctly median Bitcoin Futures Investor to loses 5-10% of their investment capitol every month trading Bitcoin Futures.
Pause for a moment to let that sink in.
Let me explain this again, and more clearly.
Please ask questions in the comments if this is unclear.
It’s important to realize when I say median, I mean median on a bell shaped curve.
The importance of median versus average, is this: First, in regard to Bitcoin Futures ETF, the word median means 50% of Bitcoin Futures ETF investors lose 5-10 percent of their capitol. Correspondingly the other 50 percent are split between 25% who lose more than 5-10% of their investment capitol and 25% who lose less then 5-10% of their investment, and included in that last 25% is the investors who actually make a profit on futures.
Said another way, 50 plus 25 = 75% of investors who buy Bitcoin ETF Futures each month lose money.
So Mathematically speaking futures trading for 75% of the futures investors is a losing proposition.
And as sobering as that math is, the more sobering fact is the majority of Bitcoin Futures ETF investors don’t understand they are not actual buying Bitcoin, nor do they understand the probabilities of success are stacked against them.

What is a Bitcoin ETF or Bitcoin Spot ETF?

A Bitcoin ETF allows you to get very close to actually owning Bitcoin without dealing with an exchange or learning how to perform self-custody of Bitcoin.
The ETF buys custodies the Bitcoin, or pays someone to custody the Bitcoin, and you buy ETF shares backed by for example, 10$ worth of Bitcoin.
Blackrock’s ETF application states the Coinbases Custody Division will custody their ETF Bitcoin.
This is one major ingredient that would make it possible for millions of Americans to buy Bitcoin as a long term hold in their tax free retirement accounts, without dealing with Cryptocurrency exchanges or the complex process of self custody, as in creating a Bitcoin cryptocurrency wallet.
This would also allow massive investment into Bitcoin by institutions who invest trillions of dollars for others.
The amount of retirement and other investment funds held by institutional investment companies is so large, that just 1% of those funds is said to be larger then the current Bitcoin Market Cap.
Which I defined as all the Bitcoin made to date.
Such a huge amount of buying pressure would surely rise the price of Bitcoin as there isn't enough Bitcoin in existence to satisfy that sort of demand, and many Bitcoiners won't sell.
Add to that the popular notion that as surely as a high tide lifts all ships at sea, a bull run for Bitcoin should be a bull run for altcoins too.

SEC doesn’t allow a Bitcoin ETF to exist, but allows a Bitcoin Futures ETF ?

The SEC has as one of it’s missions, to protect the investors.
The First irony here is that SEC has turned down seven applications for Bitcoin ETFs.
The second irony is the the math of success for investors holding Bitcoin longterm breaks down numerically like this:
- 75% of longterm (4-5 years) Bitcoin investors are profitable, versus 75% of Bitcoin futures ETF investors who are unprofitable.
- And 25% of longterm Bitcoin holders are unprofitable versus 25% of Bitcoin Futures ETF investors who are profitable.
So longterm Bitcoin investors win 75% of the time, while 75% of Bitcoin Futures ETFs investors lose.
If you understand these differences you start to wonder why the SEC approved the Bitcoin Futures ETF instead of a Bitcoin Spot ETF.
Now some will say it’s a symbol of the SEC wanting to hurt Bitcoin investors, by providing them a very risky Bitcoin Futures ETF .
If you feel that way I understand.
The true reason, according to the SEC is that the Bitcoin ETF would need to depend on the price feeds for the two largest exchange markets for Bitcoin. Which are two exchanges outside the US, who don’t have any agreements with the SEC to monitor the Bitcoin market for price manipulation.
Therefore a Bitcoin ETF can’t be approved.
The final irony here is that futures markets are monitored by the CBOE, Chicago Board of Exchange, which has an agreement with the SEC to monitor the Bitcoin futures market, and by extension the Bitcoin market for price manipulation, so the Bitcoin Futures ETF could be approved.
However, it should be noted that the CBOE monitors the price feeds of those same two exchanges, outside the US, which represent the largest markets for Bitcoin, and thus relies on them for it’s ability to detect price manipulation.
My big question is how will Blackrock satisfy this requirement?
Stay tuned, and hold on to your popcorn, this movie is about to get interesting.