Topic: Futures leading to ETF and direct hedge fund exposure? (Read 297 times)

I see something like this in the future:

Large BTC exchanges could become the new crypto hedge funds of the future and current hedgies are not too happy about it... IMHO, this is likely to occur in some fashion as most large scale investors/firms may have missed the “early boat” into cryptos and need a way to accumulate at a reduced price without greatly influencing the price too much. I see the likes of big banks becoming preferred early investors in the futures arena as a way to get a foothold into cryptoland. Once they have accumulated sufficient coins (read contracts), they will begin to parrot how important crypto is to your portfolio and why it is a good investment. Retail mom’s and pop’s will now jump in and it will be as if it was JP Morgan’s idea all along.

In the distant future, actual possession of the coin will not mean shit. This is how gov’t will take hold of BTC and regulate. There will be a day when all the coins are mined/bought and trading them around will not be practical as is today. The infrastructure will be surrounding the coin. It will be an intangible placeholder for an intangible placeholder tied to something tangible and governable (fiat).

I think "need" is the wrong word, "want" makes more sense. But yeah that makes sense. Though this is for hedging the bet as you say. To protect against the risk of losing on the futures price. Different than what some people are saying about buying in order to crash the price. Hey if shorters buy to hedge their bets I'm all for that, then that is very bullish!

In order to buy futures you need to be able to hedge your position. In order to be able to hedge your position you need to have some exposure to the underlying asset.  That means buying bitcoin.

neurotypical: [i didn't feel like keep quoting an every bigger series of posts haha]

Yes that is how I understood a Bitcoin ETF. Investment firm buys and keeps all the bitcoins for their clients. It's like Coinbase except with Coinbase obviously they recognize the Bitcoins are yours, they just control them for you, and you can send it to your own wallet whenever you want, while an ETF is a product sold by the bank or firm or whatever so the investors get the price action but yeah they wouldn't ever actually own the bitcoin and be able to do anything with it since its just a product to buy where the underlying asset is Bitcoin, the organization that sold them the ETF would own all the Bitcoin. But it'd give traditional investors a way to "own" bitcoin through an institution they normally do business with.

I don't get the people on this thread that are saying Bitcoin ETFs would be based on futures contracts and not bitcoin itself. That doesn't make any sense. Futures contracts are not an asset, they're just the bet on an asset. And the futures price just follows the Bitcoin market. So there is no asset in a futures contract that you could base an ETF off of. Doing that...is just buying and selling futures, which is what the futures market itself is. That's not an ETF. So ETF (and hedge funds buying up Bitcoin) are the two big goals for Wall St getting into Bitcoin as those two things would involve Wall St actually getting in on Bitcoin. Futures won't affect anything directly, it might change sentiment toward Bitcoin on Wall St which is why people are bullish about it, but it's not gonna have any direct affect on the price.

Well, an ETF would mean than some clueless boomer can go into a regular bank and tell them to buy Bitcoin for him. Ultimately they are not really buying Bitcoin, the bank is just buying something for you which it's not holding your own private keys, and if you are not holding private keys you are not buying Bitcoin, buy a promise that they will keep the keys for you. And how do we know that banks are actually buying the BTC to back everything up? it's supposed to be that way and it's supposed to be regulated, but who knows.

I would like to see as many options as possible for people to get into Bitcoin but people should learn that if you are not holding the private keys you are not being part of Bitcoin.

You are correct in saying that futures will not greatly impact the price of BTC whatsoever, I agree with you on that. I pointed this one out because many people including my friends thought that futures will affect BTC's price in a negative way. They are saying that this will make BTC's price tank for a little bit and I disagree with them. They are not directly related.

On the other hand, futures will help BTC to be recognized more in the financial market and be accepted by people who are not yet in cryptosphere. This will enable our beloved coin to be exposed to the world where it can't reach previously. I have a strong feeling that ETF and hedge fund that is directly related to BTC will be accepted and approved in the very near future. Year of 2018 will be good one to start with it. 

Yes. The Winklewoss twins are already making a move on Bitcoin ETF. The trick will be to link it to Bitcoin futures, which are a regulated product.
Once ETFs come into the picture, institutional investors as well as mom and pop can invest in Bitcoin through their brokerage account. This comfort will lead to demand taking off.

I've never read anything about ETFs trying to hold futures contracts. Is that even possible?! I'm pretty sure all ETFs would hold actual bitcoins. I mean I'm pretty sure the actual definition of an ETF is that it holds the underlying asset. So I definitely think you are wrong about this.

A futures market will accelerate the creation of an ETF because the ETF will be able to hold futures instead of having to deal with the logistical challenges of safely holding bitcoin itself.

But the thing about the futures is that they are cash settled, so shorting or going long in the futures doesn't matter, they're not actually buying or selling bitcoin, just betting on the price. They're not investing they're just gambling. So the futures aren't the thing we're looking for, thats just the catalyst to get Wall St interested in getting into Bitcoin.

And yeah while SEC did reject ETFs due to lack or regulation, everything I read from financial people is that a regulated futures market will advance the case of ETFs even though the futures market is entirely separate from the bitcoin market, which doesn't really make sense but hey if it makes them approve ETF I'm all for that. And I mean I don't think ETFs will be approved in the next few months, but maybe starting in the summer I could see it happen, Bitcoin marketcap might be over half a trillion by then which should be big enough for ETFs to jump in. But yeah it all comes down to if the SEC will approve them.

Im not sure if we want ETFs just yet... it's too early. Also there's no way an ETF is going to get approved anytime soon, every time someone has tried, they have failed. Notice that the SEC said that since Bitcoin cannot be regulated, an ETF for Bitcoin cannot pass. I don't see how Bitcoin can ever be regulated, since if it's regulated it's dead, so I don't see how we can ever have an ETF for Bitcoin.

But that's irrelevant, we don't really need an ETF to go to the moon. CME and Nasdaq futures are enough for anyone with money to get in and drive the price to the next level. Some futures don't even allow shorting, but I think CME does, so that's a risk that they may try to short. Let's see how it goes for them, I think a lot of idiots are trying to short Bitcoin and they are going to lose their money when it pumps back quickly.

Wondering what you all think will be the effect of the futures market on the adoption of Bitcoin in Wall St, including the time scale.

Two of the planned three Bitcoin Futures markets are starting in the next two weeks. One $100 billion hedge fund in I believe the UK has already said they will start offering direct exposure to Bitcoin once futures go online. Many financial experts expect that futures will lead to the SEC accepting Bitcoin ETFs.

Futures are a sideshow that won't affect the market. The real thing we want is direct exposure through ETFs and hedge funds. Do you think futures will lead to this and how long will it take until we have a bunch of hedge funds and approved ETFs operating in Bitcoin?