These are the lesser-known effects of Bitcoin Futures ETFs
While Bitcoin Futures Exchange Traded Funds (ETFs) launched with full fervor and record-breaking numbers in October last year, their performance has since dwindled thanks to the larger market’s depreciation. For instance, the ProShares Bitcoin Strategy ETF (BITO) was down 5.26% from yesterday’s close, at the time of writing.
Furthermore, its value has dropped by over 45% since its initial launch.
Source: Google Finance
Now, while this is in line with Bitcoin’s own weak performance during this time, an analysis of the two assets has revealed an even greater correlation.
According to a recent report by Arcane Research, Bitcoin’s price has been following a cyclical pattern. One where most BTC gains since 2021 have occurred in the first half of the month.
Source: Arcane Research
However, what’s more interesting is the role Futures-based Bitcoin ETFs have played in this trend as fund inflows have tended to follow a similar cyclical pattern. The report found that inflows have been concentrated to the days and weeks following the rolling weeks, while activity simmers down during the rolling weeks.
Source: Arcane Research
Bitcoin Futures contracts have an expiry date and traders tend to roll over the front-month contract into a further-out month in order to avoid the expenditure associated with the settlement of the contracts.
However, rolling over has its own costs and an investor seeking to allocate into the ETF might wait until the Futures have been rolled to avoid these costs, according to Arcane Research. This could explain the lull in capital inflows during the rolling weeks for BTC ETFs.
What’s more, these disparities tend to have a spillover effect on Bitcoin’s spot price, the report said.
“Market makers hedge across markets and
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