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Crypto & NFTs / Invest in bitcoin or the new ETF from Proshares?
Oct 20, 2021
Invest in bitcoin or the new ETF from Proshares?
Pros and cons anyone? Why invest in the ETF and not bitcoin directly?
Replies (5)
Oct 20, 2021
Pro with the new Etf is easy access but an obvious con is the fact it's based on bitcoin futures contracts that could lead to contango one day. What that means is traders will have to switch from the short-term contract that is approaching expiration to another contract further out in months. There's a cost to the switch. That's where contango comes in and something you hear more about in commodity markets where prices are higher in longer-term futures contracts than on the short term ones. That means as contracts approach settlement day, the Etf will have to sell lower-priced futures and buy higher-priced ones, which will erode returns every time contracts roll off.
Oct 25, 2021
@Jen926, hadn't been aware of this contango effect and now I'm seeing it all over. Thanks for the warning
Oct 20, 2021
I'm not a crypto trader here and haven't "invested" it bitcoin yet. For me the ease of going into a known product like an ETF is a benefit and seems more secure. I don't have to worry about exchange fees and wallets and anything else that's involved in trading it. Everytime I click on a bitcoin article or product it seems scammy so I can't tell what is secure and what's not.
Oct 20, 2021
Futures contract don't reflect spot price or the current price of Bitcoin and futures based ETFs on assets and commodities tend to underperform the spot or physical asset. Seen this with gold and oil (recall USO)!
Oct 25, 2021
@Jesse449, right in just learning about this..