The firm behind the first U.S. bitcoin futures-based exchange-traded fund has high hopes for its new product.
The ProShares Bitcoin Strategy ETF (BITO), which tracks bitcoin futures contracts, rose as much as 3% in its Tuesday debut.
Though some are concerned that a futures-based ETF could deviate from bitcoin’s spot price, ProShares’ head of investment strategy, Simeon Hyman, sees it another way.
“There’s a lot of evidence from experts that the futures market, if anything, is actually kind of a better place for price discovery,” he told CNBC’s “ETF Edge” on Monday.
The regulated CME bitcoin futures market trades at a significantly higher volume than the largest U.S. crypto exchanges, Hyman said.
That has helped products like his firm’s recently launched bitcoin futures-based mutual fund, the strategist said. Since its July debut, the fund has tracked bitcoin’s reference rate, an aggregate of its price on several spot exchanges, more closely than the popular Grayscale Bitcoin Trust (GBTC), he said.
“Other forms of exposure may not be as effective in terms of giving you a real indication of value or performing in line with what folks might expect and require from their bitcoin investment,” he said.
As for the ETF, “we think it’ll track quite well and most importantly, we think that the combination of a regulated futures market and a ’40 Act ETF will really open up the opportunity to conveniently get bitcoin exposure to a lot of folks who may have been waiting on the sidelines.”
The Investment Company Act of 1940 regulates investment funds including mutual funds, closed-end funds and ETFs.
The other big concern around bitcoin funds revolves around market manipulation, but a futures-based product guards against that, too, Hyman said.
“It’s very difficult if almost impossible to try to manipulate the futures market,” he said. “The combination of the CME and the CFTC is really a valuable piece of that ecosystem and the clearinghouse mechanism makes sure that really nothing kind of funny happens in the futures market.”
Several other ETF providers are likely to launch their bitcoin futures ETFs in the days following ProShares’ debut including Invesco, VanEck, Valkyrie and Galaxy Digital.
While the advent of these funds may not lead directly to an ETF backed by physical bitcoin, ProShares will always look to innovate when possible, Hyman said.
“We think these ETFs will add to the robustness of that space and we’re also watching the evolution of the regulatory environment,” he said. “If the opportunity arises, we’ll certainly be exploring other opportunities to bring important and differentiated solutions to investors.”
Disclosure: Invesco is the sponsor for CNBC’s “ETF Edge.”