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In its latest filing for a futures-based exchange-traded fund (ETF), Valkyrie Funds has leveraged a popular meme from the financial Twitter community, known as “fintwit,” to generate attention and interest.
On May 16, the investment firm submitted a new application for a Bitcoin (BTC) futures-based ETF to be listed on the Nasdaq under the ticker symbol “BTFD.”
Neither of Valkyrie’s Bitcoin-centric funds holds direct exposure to Bitcoin itself. Instead, they invest in Bitcoin futures traded on the Chicago Mercantile Exchange. Bitcoin futures are financial contracts that allow investors to speculate on the future price movements of Bitcoin. These contracts obligate the buyer to purchase, or the seller to sell, Bitcoin at a predetermined price on a specific future date. Unlike trading Bitcoin, which involves owning and holding the digital asset directly, Bitcoin futures enable traders to speculate on the cryptocurrency’s price without direct ownership.
The suggestive ticker was initially intended for the firm’s first fund but was reportedly modified by the company in October 2021.
In contrast to the firm’s existing block trading facility (BTF) fund, this newly proposed fund will offer leverage, allowing speculators to increase their exposure to the dominant cryptocurrency. A BTF is an actively managed ETF available through Nasdaq that invests primarily in Bitcoin futures contracts.
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To date, the market has seen the introduction of four distinct Bitcoin futures-based ETFs. The first, the ProShares Bitcoin Futures ETF, was launched in October 2021.
So far, the United States Securities and Exchange Commission (SEC) has denied several attempts to introduce Bitcoin spot ETFs or funds that provide direct exposure to the dominant cryptocurrency, citing concerns regarding potential market manipulation in the Bitcoin market.
Related: Breaking: Court victory for Ripple as judge denies SEC motion to seal Hinman docs
Digital asset manager Grayscale is currently engaged in a prolonged legal dispute with the SEC as it seeks to convert its struggling Grayscale Bitcoin Trust into a Bitcoin spot ETF. The investment firm criticized the SEC’s decision to authorize futures-based ETFs instead of spot ETFs, describing the move as “illogical.”
In March, judges presiding over the dispute between the two entities in the U.S. Court of Appeals for the District of Columbia Circuit expressed the view that the SEC “must provide a thorough explanation” regarding its understanding of the connection between Bitcoin futures and the spot price of Bitcoin.
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