ETF Inflows & Outflows
Performance Leaders & Laggards
Source: ETF Action; flows and performance data as of 8/31/23; performance data excludes leveraged and inverse products
Weekly ETF Reads
What’s Under the Hood? What Matters for ETF Liquidity by Bob Elliott & Johann Colloredo-Mansfeld
“For the ETF space, the volume of the underlying securities are an equally important factor in determining trade costs.”
(Note: On this week’s ETF Prime podcast, I was joined by Tom Generazio who is Senior Trader on the Institutional Block Desk at Charles Schwab. If you trade ETFs in any fashion, I highly recommend listening to our conversation which expands on several of the key points in the above blog.)
Lessons From 2 Jim Cramer ETFs by Allan Roth
“I’ve often said one of my professional goals is never to be confused with Jim Cramer.”
Amplify’s Christian Magoon on Purchase of ETFMG’s ETFs by Heather Bell
“We don’t have any plans to be in a white label business.”
Advisors debate: ETFs, mutual funds or both? by Gregg Greenberg
“The first modern mutual funds were launched in 1924, whereas the first ETF was issued almost 70 years later, in 1993.”
How Hashdex’s planned bitcoin ETF differs from competing proposals by Ben Strack
“The crux of the matter is whether obtaining bitcoin exposure by exchanging futures for spot bitcoin on the CME adequately addressed the SEC’s concerns about the spot bitcoin market.”
ETF Tweet of the Week
Without question, the ETF story of the week (year?) was Grayscale prevailing in their lawsuit against the SEC. Grayscale is attempting to convert the Grayscale Bitcoin Trust (GBTC) into an ETF. Much ink was spilled last week, so I’m including several pieces that I thought did a particularly nice job of explaining the basics of what happened and what might come next. I have also included links to March’s oral arguments in the case, along with this week’s ruling. Note that Grayscale’s Chief Legal Officer, Craig Salm, will join me on next week’s ETF Prime to go in-depth on this entire situation.
GBTC Litigation: Oral Arguments Unofficial Transcript (provides full detail on Grayscale’s arguments and the SEC’s defense)
“Bitcoin futures are derivatives of Bitcoin itself, and the undisputed record of evidence shows that 99.9% of the time, the price of Bitcoin futures and Bitcoin spot market correlate.”
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT ruling
“The Commission’s unexplained discounting of the obvious financial and mathematical relationship between the spot and futures markets falls short of the standard for reasoned decision-making.”
Grayscale’s Victory Over the SEC Doesn’t Mean a Spot Bitcoin ETF—for Now by Bryan Armour
“This ruling doesn’t force the SEC to approve Grayscale’s filing for a spot bitcoin ETF.”
Grayscale’s Court Win Over SEC Lifts Hopes for Bitcoin ETF Approval by Paul Kiernan
“The ruling was unanimous in a three-judge panel.”
A spot bitcoin ETF is much closer to reality, but investors aren’t quite there yet by Bob Pisani
“Well, now the SEC is in a real pickle.”
Grayscale Faces ‘Instantaneous’ Fee War in US Bitcoin ETF Race by Katie Greifeld & Vildana Hajric
“I think it would be an instantaneous race to the bottom.”
ETF Chart of the Week
With all of the hype and optimism surrounding the potential approval of spot bitcoin ETFs, I thought this was the PERFECT chart to level-set expectations. The approval of spot bitcoin ETFs does not necessarily mean the price of bitcoin will “moon”. Bloomberg’s James Seyffart correctly pointed out this week that CME-traded bitcoin futures debuted in December 2017 – right at the top in the price of bitcoin. Bitcoin futures ETFs launched in October 2021 – another top in the price of bitcoin. If and when spot bitcoin ETFs are approved, just remember… Nobody. Knows. Anything.
My advocacy for spot bitcoin ETFs is not because I think bitcoin is a good investment per se. Instead, I believe ETFs offer a potentially much lower cost, more efficient, and safer way to gain bitcoin price exposure than many existing options on the market. I also view bitcoin ETFs as a bridge between traditional finance and decentralized finance – hopefully, a way to help get more people interested in learning about crypto.
Source: Benjamin Felix
