Bitcoin ETFs should not exist

Bitcoin ETFs should not exist

Good morning. Lots of great responses to yesterday’s margins piece; I address a few of the points raised below. But first, a brief screed about the wrong kind of financial innovation. Email me: [email protected]

Bitcoin ETFs: a bad idea whose time has come

You can now buy a bitcoinexchange traded fund. Or rather, a Bitcoin derivatives ETF: ProShares Bitcoin Strategy, which tries to capture returns from the cryptocurrency using futures contracts, started trading yesterday.

I’m sure this is good news for someone, but on the face of it, it is hard to imagine a less appealing financial product.

The original idea of an ETF was that it provided a cheap way to receive the beta available in a given market, beta that would be hard to efficiently capture otherwise. Reproducing the return of the Russell 3000 would be a pain in the ass for me to do at home, but Vanguard’s ETF does an almost perfect job of it for me, for all of 10 basis points.

Bitcoin Strategy provides an expensive way to capture some of the beta in a market, which it would be easy to capture, more efficiently, another way. The annual fee is 1 per cent. It draws its exposure to