Satoshi Emails | Are Bitcoin Futures ETFs Dinosaurs?

The arrival of exchange-traded funds based on bitcoin prices makes the value of older futures-based rivals uncertain. Yet Proshares is doubling down on the strategy.

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Nina Bambysheva Staff Writer, Forbes Money & Markets
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Steven Ehrlich Director, Forbes Digital Assets
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PROSHARES HAS HIGH HOPES FOR BITCOIN FUTURES ETFS

With the advent of spot bitcoin ETFs, which have amassed $34 billion of assets, the outlook for futures-based crypto funds is suddenly uncertain. The new crop of funds should do a better job of tracking bitcoin prices and also carry lower fees, a double win for investors.

But Bethesda, Maryland-based ProShares, which launched its fund in October 2021, is doubling down on the concept.

It has no plans to retire its Bitcoin Strategy ETF (BITO), which has $2 billion in assets, nor convert it to a spot offering. Instead, it recently filed to offer a suite of complementary futures-based ETFs that add leverage to the funds’ indirect bitcoin investments, something the spot funds do not do. Read more.

PENNY STOCK BAKKT LOST $2 BILLION BUT FORGES ON

When Bakkt launched in 2018, the markets were ecstatic. “Intercontinental Exchange (ICE), the owner of the New York Stock Exchange, is now in the bitcoin business,” read the MIT Technology Review. Fortune predicted Bakkt would bring bitcoin to your 401(k). The crypto infrastructure company would enable its parent to compete with rival CME Group in selling bitcoin futures.

In fact, ICE had even grander plans. When it revealed the roadmap for Bakkt in August 2018, it announced partnerships with Starbucks and Microsoft and promised “an integrated platform that enables consumers and institutions to buy, sell, store and spend digital assets on a seamless global network.”

But throughout the years Wall Street’s crypto darling has struggled to lock onto a viable product offering in a series of strategy shifts, and recently warned stockholders that it might not survive. The company's shares shot higher upon completion of the SPAC deal in October 2021, briefly cresting at $45.52. Bakkt's market value was above $2 billion every trading day for the rest of the year but is now just $247.2 million with the stock down to 90 cents. Read more.

CURRENT PRICE OF TOP 5 COINS (7-Day % Change)

Coin

Price

Percent Change

Bitcoin (BTC)

$51,005

2%

Ether (ETH)

$2,935

5.3%

Tether (USDT)

$1.00

0%

Binance Coin (BNB)

$374

4.2%

Solana (SOL)

$101

7.8%

Sources: Forbes Digital Assets, CoinGecko. Prices as of 1:40 p.m. on February 23, 2024.

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THE SATOSHI EMAILS

The identity of Satoshi Nakamoto, bitcoin's anonymous inventor(s) who disappeared shortly after creating the cryptocurrency, has remained a mystery disputed only by Australian computer scientist Craig Wright, who is currently fighting for his claim to fame in the U.K. court. Newly surfaced emails submitted by some of Nakamoto’s earliest collaborators during the trial offer unprecedented insight into the discussions leading up to bitcoin’s launch. Read more.

KRAKEN MOVES TO DISMISS SEC LAWSUIT

Digital-asset exchange Kraken filed a motion on Thursday to dismiss an SEC lawsuit, arguing that the agency lacks jurisdiction over its business because cryptocurrencies are not based on contracts. The SEC sued Kraken in November, alleging that it operated as an unregistered securities exchange, broker, dealer and clearing agency. The agency listed 16 cryptocurrencies that were traded on Kraken’s exchange that it alleges are securities. The assets include solana, Polygon’s matic, and flow, and all 16 are currently worth about $102 billion.

The action followed similar suits in June 2022 against the larger Binance and Coinbase exchanges, alleging that they operated as unregistered securities exchanges. Both have filed motions to dismiss the cases on grounds similar to those stated by Kraken.

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