Invesco will Not Launch ETFs on Bitcoin Futures
Invesco’s application to launch an ETF for bitcoin futures has been approved by the SEC. Only, for some reason, Invesco changed its mind about launching this product. The reason was announced by the company’s representatives – a large shortage of ETFs.
The Financial Times business newspaper interviewed Anna Paglia, head of Invesco’s ETF and Index Strategies department. She spoke in detail about why the exchange-traded fund for bitcoin futures will not be launched. It’s all about the cost and demand for investors. It concerns such an exchange concept as “contango”. The prices of futures on the asset are increasing, which means that the transfer of positions for the next month promises serious losses to the fund.
Paglia agreed that bitcoin futures on CME will become a productive element in the portfolio. However, there has never been a question that only from these futures products will bring profit.
From the words of the top manager of Invesco, it became clear that in an ideal investment portfolio there should be a whole set consisting of swaps, futures, direct investments in bitcoin, ETFs and investments in private funds. This approach will protect investors from any changes in liquidity.
Anna Paglia noted that their company could not provide the above set. Therefore, the application was withdrawn. She also said that as the market was monitored more closely, they came to the conclusion that there was a more effective way to provide investors with access to bitcoin. And that’s why Invesco doesn’t expect anything from a simple bitcoin futures ETF. They’ve done a lot of simulations. And it showed that every month the company would spend 60-80 basis points to extend futures. For the whole of this year, the indicator would have come to 5-10%.
Anna Paglia shared why the company so quickly, or rather within 24 hours, decided to apply for the launch of the fund to the SEC. This happened after Gary Gensler’s announcement that support for the launch of such ETFs would be provided. And the company at that time put a lot of effort into its application. Therefore, it was not easy to refuse to launch an ETF for bitcoin futures. And if there was a need to do it again, the board of Invesco would make an identical decision.
Not so long ago, Bitwise withdrew an application for an ETF for bitcoin futures. Matt Hogan, the investment director of this company explained that it was also a surprise decision for them, as they had done a lot of work before applying. The board of this company chose a more promising option – the opening of a subsidiary branch in the Cayman Islands, as well as the launch of an ETF with direct investments in BTC. The company also acknowledged that futures funds are still far from perfect.
In September 2021, Invesco signed a contract with Galaxy Digital, which will allow them to jointly open several exchange-traded funds (ETFs) for cryptocurrencies.
