The entry ticket for traditional investors: which one to choose, Spot-ETF or Futures-ETF?

What is a Bitcoin ETF?

Exchange Traded Fund (ETF) has changed the way ordinary investors participate in crypto assets. Bitcoin-ETF allows you to track Bitcoin price fluctuations without actually holding Bitcoin or understanding wallet security. These funds are listed on traditional stock exchanges, providing liquidity far exceeding that of directly purchasing crypto assets.

In simple terms: Buying a Bitcoin ETF is as easy as buying stocks. The fund manager is responsible for holding the underlying assets or related contracts, and you only need to place an order through a broker.

Two Investment Paths: Spot-ETF vs Futures-ETF

Two mainstream ETF products have emerged in the Bitcoin ecosystem, targeting investors with different risk preferences—Spot-ETF directly holds real Bitcoin, while Futures-ETF participates indirectly through futures contracts.

Spot-ETF: The most direct way

Core Logic of Spot-ETF: The fund truly holds Bitcoin. Suppose a certain Spot-ETF manages 10,000 Bitcoins and issues 1,000,000 shares, then each share theoretically represents 0.01 Bitcoin.

The net value of the fund is linked to the real-time price of Bitcoin. When Bitcoin rises to $50,000, the value of your Spot-ETF shares will increase accordingly. This correlation is direct, transparent, and easy to understand.

Advantages of Spot ETF:

• No need for self-custody wallets, avoiding theft risks
• Trade within the regulatory framework to reduce risks
• The trading method is familiar, just like buying ordinary stocks.
• The fee structure is relatively simple.

But there are also challenges:

• The fund management fee usually ranges from 0.2% to 2.5%.
• Fund performance may have slight deviations from spot prices due to management fees.
• Bitcoin itself is highly volatile.

Futures-ETF: For advanced investors

Futures-ETF does not directly hold Bitcoin. It invests in Bitcoin futures contracts—agreement-based products that allow investors to bet on the price of Bitcoin three or six months in the future.

Assuming a Futures-ETF purchases 1000 Bitcoin futures contracts, with each contract agreeing to buy one Bitcoin at $55,000 three months later. Funds are raised by issuing 10 million fund shares, with each share corresponding to 0.0001 futures contracts.

If the market expects Bitcoin to be far above 55,000 USD in three months, the fund shares may trade at a premium. Conversely, they may trade at a discount.

Advantages of Futures-ETF:

• Operate in a fully regulated environment
• High liquidity, easy to enter and exit
• Suitable for investors who are optimistic about short-term price increases.

Hidden Risks:

• No direct holding of Bitcoin, just futures exposure.
• The futures market has a high level of complexity, involving rollover operations.
• Fund performance may significantly deviate from spot prices.
• Must bear counterparty risk (the other party in the futures contract may default)
• Leverage and contract duration increase the level of risk.

Core Difference Comparison Table

Who Should Choose Spot-ETF?

Ideal Customer Profile:

• Believe in the long-term value of Bitcoin and want to lock in spot exposure.
• Tired of wallet management and security issues
• Hope the trading experience is simple and intuitive.
• Medium risk tolerance

Spot-ETF is most suitable for traditional stock investors - a familiar trading interface with a clear value correspondence.

Who is the Futures-ETF suitable for?

Ideal Customer Profile:

• Have futures trading experience or willing to learn
• Want to profit from short-term price fluctuations
• Need to hedge other investment portfolios
• Can withstand more complex risk structures

This type of investor is often a professional or semi-professional trader, accustomed to the complexities of leverage and contract rollovers.

Market Status: New Bitcoin Spot ETF on the Way

In 2023, institutional giants such as BlackRock, Invesco, Ark Invest, and Fidelity successively submitted applications for Bitcoin Spot-ETFs. If approved, there will be more choices for investors, and the product differences will be richer.

When choosing ETF products, pay attention to:

• Management fee level (directly affects long-term returns)
• The reputation and past performance of the fund manager
• Trading liquidity (the smaller the bid-ask spread, the better)
• Is there a multi-asset basket available (to diversify risk)

Core Recommendations

For most beginners: Spot-ETF is the more prudent choice. It eliminates the complexities of self-managed assets while providing clear and transparent exposure to Bitcoin. Although the fees are slightly higher, it brings mental security and operational convenience.

For advanced players: Futures-ETF offers more flexible trading opportunities, but requires a deep understanding of the futures market. It is not suitable for blindly following trends.

The most important thing is: Conduct thorough research before investing. Consult a qualified financial advisor and make choices based on your risk tolerance and financial goals. Crypto assets are full of opportunities, but they also hide risks. Caution comes first, profit second.