Close Menu
LockMeta
  • News
  • Bitcoin News
  • Ethereum News
  • Altcoin News
  • NFT News
  • Business News
  • Market News
  • Policy News
X (Twitter) Telegram
LockMeta
  • News
  • Bitcoin
  • Ethereum
  • Altcoins
  • NFTs
  • Business
  • Markets
  • Policy
X (Twitter) Telegram
LockMeta
News 2 years ago

JPMorgan Chase warns that ETF may distort the market

JPMorgan Chase warns that ETF may distort the market
London, UK - May 27, 2012: investment bank J P Morgan & Co European headquarters in Canary Wharf, which was brought by the company in 2010 after the collapse of Lehman Brothers the previous owners

Just two days after the Bitcoin ETF went public, JPMorgan Chase’s strategists warned that the release of pent-up demand for Bitcoin ETF may distort the futures market and increase the cost of ETF investors.

Before the first game-changing Bitcoin-linked ETF in the United States, many people on Wall Street warned that, given its holding costs, such derivatives-driven transactions were not a free lunch.

This is an urgent issue. The ProShares Bitcoin Strategy ETF (code: BTIO) is one of the most successful ETF listings in history. In just two days, the purchase amount of investors reached 1.1 billion U.S. dollars.

The problem, however, is the cost of renewing the contracts held by the fund. JPMorgan Chase strategists Bram Kaplan and Marko Kolanovic pointed out that in October and November Bitcoin futures contracts, BITO alone accounted for a quarter of open positions, but more Bitcoin ETFs will emerge.

“If these products accumulate a large amount of assets, the holding costs of such futures may be higher,” Kaplan and Kolanovic wrote in Thursday’s report. “They will further push up the futures curve relative to the spot price and the cost of contract rollover, leading to greater holding costs.”

Strategists stated that since mid-2019, the average annualized rollover cost between the second month and the first month of Bitcoin futures has been about 9%. The cost between the fourth and second futures is about 8%.

JPMorgan Chase stated that this means that the holding cost of an ETF based on Bitcoin futures may be several times higher than the management fee for the product. As far as BTO is concerned, the expense ratio is 0.95%.

There are many other funds in preparation. Although they will be actively managed funds that can theoretically be traded at different points on the futures curve, Kaplan and Kolanovic claim that they are similar to volatility exchange-traded products, which have expanded in size to start pushing up their own costs. .

“The more long positions an investor holds, the higher the cost of holding the position due to the ETP’s own influence on the market.”

Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
Previous ArticleWhat is DeFi 2.0?
Next Article Candy Digital completes $100 million in Series A financing

Related News

2 months ago

SEC Chairman: Cryptocurrency tokens are not currency and do not meet the three functions of currency

4 months ago

Musk Backs Crypto-Friendly Republican Presidential Candidate Vivek Ramaswamy

2 years ago

Crypto lending platform Ledn is working to bring bitcoin mortgages to Texas

2 years ago

Liquid Global: SOL withdrawals will resume soon

2 years ago

Data: 65% of Bitcoins have not moved in more than a year, hitting an all-time high

2 years ago

USDC issuance on the Avalanche chain exceeds $1.5 billion, a record high

2 years ago

Optimism’s governance system makes me proud

2 years ago

More than 50% of Uniswap transactions are completed by MEV robots

The Latest
Market News 7 days ago

SEC seeks public feedback on Franklin Templeton and Hashdex spot Bitcoin ETFs

Business News 7 days ago

Chairman of the Monetary Authority of Singapore: Bitcoin has no underlying assets and cannot be used for cross-border payments

Altcoin News 7 days ago

The number of addresses holding DOGE exceeded 5 million

Bitcoin News 7 days ago

Bitcoin velocity is at historic lows

Business News 1 week ago

Seeking a statutory maximum sentence of 10 years in prison for former Binance CEO CZ

Crypto Assets
  • Bitcoin
  • Ethereum
  • Altcoins
  • NFTs
Market Dynamics
  • Business
  • Markets
  • Policy
Support
  • Contact Us
  • Advertise
About
  • About Us
  • Privacy Policy
  • Terms of Service

The daily digest for crucial crypto news updates.

X (Twitter) Telegram
Disclaimer:

LockMeta endeavors to provide accurate and current information. However, due to the evolving nature of the crypto space and reliance on external sources, we cannot guarantee its complete accuracy. We advise users to conduct their own research and consult professionals before making decisions. LockMeta assumes no liability for actions based on our content.

© 2023 LockMeta.

Type above and press Enter to search. Press Esc to cancel.