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Invesco Managers Reveal The Real Reason Behind The Bitcoin ETF Launch!

Invesco Managers Reveal The Real Reason Behind The Bitcoin ETF Launch!

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Answer Invesco Managers Reveal The Real Reason Behind The Bitcoin ETF Launch!

Invesco was one of three companies that were on the verge of taking approval for another bitcoin-trading fund in the United States.

But as the fund official mentioned, the product will become very expensive for investors even if it is approved, according to reports Financial Times .

The Atlanta-based company was planning to launch a bitcoin ETF the day after its “ProShares” product debuted with nearly $1 billion in funds pouring into the market, but despite the perfect timing and all the efforts put into the deposit, the company decided not to. They made an offer to their clients via the ETF and they withdrew the order.

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Invesco’s main concern about their new product was related to the nature of the futures-based Bitcoin ETF and problems with rollover costs, which are related to the product’s suitability for investors.

As the high cost of the rollover is a result of the price of the futures contract exceeding the price of the underlying asset, which is termed as “contango“.

Because of the “contango” issue, the funds immediately face losses after entering into a new contract for the next month and thus, the traders face losses as well and have to treat the ETF entry at a premium.

Private traders are more likely to receive direct exposure rather than trading an asset at a significant premium.

For institutional investors, the fund’s desire for a piece of the pie would not have ended well, as we can see from the experience of the Bitcoin futures ETF.

Compared to the inflows on the first trading day, other ETFs were unable to show results in the market and ended up receiving a few million compared to the billions of ProShares.

As the fund manager finally mentioned, according to the company’s research, there are more effective ways to provide exposure to the cryptocurrency market rather than giving investors something unrelated to the product they expect.

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Read also:

Bitcoin (BTC) dominance of the cryptocurrency market drops to 42%

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