Bitcoin and most other digital assets started the year in a bullish trend, with several crypto tokens surging to their highs for the first time in months. The equity market’s exchange-traded fund (ETF) also behaved similarly to the spot market, as Bitcoin dominates the two sectors.
Leading The Pack
On-chain data shows BTC as the dominant crypto asset leading the equity ETF and the leveraged equity ETF industry, which experts see as a rare occurrence in history. According to Bloomberg senior ETF analyst Eric Balchunas, the Valkyrie Bitcoin Miners ETF (WGMI) is a highly concentrated investment tool carried out by only 20 companies in the digital asset ecosystem.
Listed on Nasdaq in February 2022, the WGMI ETF is the leading equity ETF market that did not directly invest in Bitcoin at its inception.
As a result, Valkyrie invests the remaining 20% of its assets in enterprises that hold massive portions of their holdings in BTC. ProShares Bitcoin Strategy was the first Bitcoin ETF registered in the United States.
Founded in October 2021, ProShares tracks the price of Bitcoin through futures contracts that are traded on the CME floor. Moreover, after its launch, the first ETF gained significant traction in the market after it recorded a whopping $1 billion on its first trading day.
The impressive result made many believe that its success could convince regulators to approve the spot market ETF last year. However, the crypto winter of 2022 and several market fallouts turned the tide against the approval of crypto ETFs, despite several applications to the US Securities and Exchange Commission (SEC).
On the other hand, crypto-based ETFs were the least-performing in Australia in 2022, and the same scenario is currently playing out in the United States. Additionally, ETF.com shows that the top four worst-performing ETFs in the US last year were all crypto-related.
Is Bitcoin Futures ETF Still Attractive?
One exciting thing about crypto-based ETFs is that while others in the industry lament its poor performances last year, investors have plunged massive funds into Bitcoin futures ETFs amid the general market downtrend.
On-chain data shows that in the first 11 months of last year, investors deposited $241 million into six different US-based Bitcoin Futures ETFs. However, out of this total amount plowed by investors, $198 million was made in June, which BitPay stated signifies a “deep freeze” in the crypto industry.
Investors also made investments worth hundreds of millions of dollars into ProShares’ Bitcoin Strategy ETF despite the market correction. Despite the SEC not approving any spot Bitcoin-based ETF due to fraud concerns, industry experts believe that a Bitcoin Futures ETF provides a safer alternative.
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