Market Overview

Issuers Scramble To Enter The Bitcoin ETF Fray

Issuers Scramble To Enter The Bitcoin ETF Fray

Bitcoin futures debuted on the Cboe Global Markets, Inc. (NASDAQ: CBOE) futures index last week followed by a similar product on CME Group Inc. (NASDAQ: CME), the world's largest futures exchange, on Monday. With all the fanfare surrounding the debut of futures tied to the hot digital currency, speculation is increasing regarding the launch cryptocurrency-based exchange traded funds. 

Prior to the launch of Cboe bitcoin futures, several ETF issuers filed plans with regulators for related ETFs. The digital currency's futures debut on CME, listed under the ticker "BTC," has also been followed by fresh ETF filings.

Reports Tuesday reveal that GrantiteShares, an upstart ETF issuer, and Direxion are looking to get in on the bitcoin ETF party.

Direxion's Offering

Direxion is one of the largest issuers of inverse and leveraged ETFs. The company is known for, among ETFs, the Direxion Daily Gold Miners Index Bull 3X Shares (NYSE: NUGT), Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Small Cap Bull 3X Shares (NYSE: TNA).

A new filing with the Securities and Exchange Commission shows Direxion is seeking to introduce an actively managed bitcoin ETF.

The Direxion Bitcoin ETF will look to “to provide total return that exceeds that of bitcoin futures contracts over a complete market cycle," according to a SEC filing.

"The fund will generally seek to achieve its investment objective by investing, under normal circumstances, in bitcoin futures contracts traded on the CME and/or CBOE futures exchanges and swaps on bitcoin futures contracts that trade on the CME and/or CBOE future exchanges." 

Risks to futures-based strategies include performances that do not exactly mirror those of the underlying asset and contango, the scenario where futures contracts trade for prices above the spot price of the asset.

GraniteShares, Too

GraniteShares, which launched all three of its ETFs earlier this year, is also eyeing bitcoin ETFs. All three of the existing GraniteShares ETFs are commodities funds. The issuer is looking to extend that expertise to its bitcoin funds, as the filing reveals that those funds will be passively managed commodities pools.

The issuer wants to introduce the GraniteShares Bitcoin ETF and an inverse product, the GraniteShares Short Bitcoin ETF.

Tickers and expense ratios for the GraniteShares products were not included in the filing

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