The Valkyrie Bitcoin Strategy ETF, the second Bitcoin futures based fund approved for the US market, started trading on Friday 22 October on the NASDAQ under the symbol BTF.
The Valkyrie Bitcoin Strategy ETF will own Bitcoin futures contracts rather than the actual coin itself. This means it tries to track Bitcoin price fluctuations rather than purchasing the actual asset.
Valkyrie Funds CEO Leah Wald told Bloomberg the regulation of futures in the US might provide some greater sense of security to investors over buying the actual asset. The company has applied for approval of an ETF backed by Bitcoin itself, she said, but does not expect that until possibly next year.
How to invest in BTF ETF
- Compare online brokers. To invest in exchange traded funds (ETFs) listed in the United States, you will need to sign up to an ETF broker with access to US markets. Our table below can help you choose.
- Open and fund your brokerage account. Complete an application with your personal and financial details. Fund your account with a bank transfer, PayPal or debit card.
- Search for the BTF ETF. Find the ETF by name or ticker symbol: BTF. Research it using the prospectus and other information at the sponsor's site to make sure you understand how it works and to confirm it's a solid investment based on your financial goals.
- Purchase now or later. Buy today with a market order or use a limit order to delay your purchase until the BTF ETF reaches your desired price.
- Decide on how many to buy. Weigh your budget against a diversified portfolio that can minimize risk through the market's ups and downs.
- Check in on your investment. Congratulations, you've invested in the BTF ETF.
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What we know about the BTF ETF
Launched on 22 October 2021 by alternative asset management firm Valkyrie and headed by Leah Wald, the Valkyrie Bitcoin Strategy ETF (BTF) seeks to provide investors with capital appreciation through exposure to Bitcoin futures.
The crypto-native fund manager is set to become the third sponsor of a Bitcoin futures ETF in the US.
This means investors will not directly own the underlying asset, but instead they will be exposed to future contracts. This means the price of the ETF will increase as the value of Bitcoin rises and the inverse occurs if the price of Bitcoin should fall.
The ETF, which originally filled in August, noted management fees for the fund will be 0.95%, which is the same fee as the ProShares ETF that also tracks futures contracts.
Valkyrie's launch follows the highly successful ProShares debut several days prior, which set history by becoming the first Bitcoin-related ETF to be approved by the SEC. ProShares continued to break records on its first 2 days of trading, becoming the fastest ETF fund to hit US$1 billion in assets under management.
Valkyrie's launch day was marred by a declining Bitcoin price, causing the ETF to open at US$25.50 and close 4% down at US$24.
Bitcoin ETF or Bitcoin: Which is better for you?
Bitcoin ETFs better for
- Investors who want exposure to Bitcoin without owning the actual asset or setting up a separate account
- Frequent traders looking to avoid upfront fees for buying and selling Bitcoin
- Investors who'd rather pay an annual fee than trade fees
- Investors who don't plan to trade outside US stock-market hours
- Investors who see safety in regulatory oversight, since ETFs and futures markets are more regulated in the US than cryptocurrencies
Bitcoin better for
- Investors looking for an investment in crypto itself
- Investors who want to take full advantage of exposure to Bitcoin's price movements by owning it directly
- Long term investors looking to avoid a large annual fee
- Investors who plan to trade 24/7 or whenever there's a big price change
Are cryptocurrency ETFs a good investment?
Founder & CEO at Monochrome Asset Management
For everyday investors, accumulating physical Bitcoin comes with added hurdles of custody and operational risks.
"Bitcoin as a technology is battle-tested, but there is an inherent operator's risk when self-acquiring, holding and managing a bitcoin position even for the most experienced digital native, hence there's a market for those who prefer a safe pair of hands to manage their investment in exchange for a small management fee.
"Investing in a Bitcoin ETF offers investors the benefits of a safe yet low barrier to diversifying their portfolio into the asset class since it's a well understood financial product for most investors."
Who is the BTF ETF suited for?
The Valkyrie ETF is not as simple as investing in Bitcoin via an ETF. It tracks Bitcoin futures contracts, which makes it a bit more complex than an ETF that just tracks the price of Bitcoin. As Valkyrie itself says on the product page "investors seeking direct exposure to the price of Bitcoin should consider another investment" (such as a cryptocurrency exchange or broker).
Remember that Bitcoin futures contracts are derivatives, which allow buyers and sellers to speculate on what the price of Bitcoin will be by a given date. In the case of BTF, it tracks BTC futures traded on the Chicago Mercantile Exchange (CME).
With that in mind, according to the prospectus, this is how the Valkyrie ETF works:
- Purchasing shares in the ETF gets you a share of the fund.
- The fund is made up of a mixture of assets. These include CME Bitcoin futures contracts, cash and cash-like equivalents. Cash is necessary to pay for contracts, fees and other costs.
- The fund is actively managed, which means futures contracts are regularly bought and sold in order to generate a profit, in line with the fund's investment objectives.
- The objective of the fund is to maintain exposure to Bitcoin "as close to" 100% of the time, allowing for temporary cash positions while contracts are bought and sold.
This means BTF may be suited to you if you want exposure to the volatility of Bitcoin markets, via the use of futures contracts, without wanting to actually trade them yourself.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.