VanEck Bitcoin Futures ETF Finds Cool Reception

Investment firm VanEck’s bitcoin futures exchange-traded fund (ETF) started trading on the Chicago-based CBOE exchange Tuesday after weeks of delays, but the first-day reception looked chilly compared to launches of similar funds last month.

The VanEck ETF (stock ticker XBTF), which is designed to roughly track the price of bitcoin, attracted a fraction of the trading volume witnessed when the ProShares Bitcoin Strategy ETF went live on Oct. 19. The VanEck ETF’s shares ended the day around $59.73, with a trading volume of 44,698 shares, or about $4.8 million in dollar terms. By comparison, the ProShares ETF, with the stock ticker BITO, hit a trading volume of about $1 billion by the end of its first day.

The VanEck vehicle “did not really move the needle in attracting new investors,” Edward Moya, senior markets analyst for the foreign-exchange broker Oanda, wrote Tuesday in an email.

The new ETF is managed by VanEck’s head of active trading, Greg Krenzer, and the launch comes several weeks after the application won approval from the U.S. Securities and Exchange Commission (SEC) in late October.

Notably, the VanEck ETF advertises a net expense ratio of 0.65%, lower than the 0.95% charged by the ProShares Bitcoin Strategy ETF and the Valkyrie Bitcoin Strategy ETF.

The “low fee will help but not in near term,” Bloomberg ETF analyst Eric Balchunas, wrote in a tweet on Tuesday. “I do see it being successful, but it will take some time.”

The increase in ETFs listed in the U.S. indicates a growing degree of market maturity and acceptance from regulators, even though some analysts have warned that the new vehicles might not track bitcoin’s price as well as a direct investment in the cryptocurrency.

“All this is doing is compressing downwards the bitcoin ETF in the U.S. at a much faster rate than in Europe,” said crypto ETF expert Laurent Kssis, director of CEC Capital.

He added that XBTF is an actively managed ETF and many investors won’t know how and when the futures contracts are purchased or sold. There’s also the risk that returns might be eroded by the need to constantly “roll” futures positions into new contracts at the monthly expiration.

“There are decent rolling cost (soon to expire) contracts to futures months which are passed on to the product and hence the investor,” Kssis said.

The VanEck fund is the third bitcoin futures ETF to start trading in the U.S., so it’s possible the frenzy for such investment vehicles may have subsided since last month’s much-hyped launches.

In October, the SEC greenlit the ProShares Bitcoin Strategy ETF (stock ticker BITO), which subsequently listed on the New York Stock Exchange (NYSE). The fund quickly gathered more than $1 billion in investor assets, the fastest an ETF has ever hit that milestone.

Following ProShares’ much anticipated ETF launch, Valkyrie Investments’ bitcoin futures ETF started trading on the Nasdaq a couple weeks ago.

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