Derivatives help increase liquidity and improve markets for an asset category by allowing investors to bet on ups and downs of an asset, evening allowing individuals to adopt market-neutral strategies.
Nasdaq Inc. is still considering entering the bitcoin futures competition. Market observers previously expected Nasdaq to launch futures on the digital currency this year. The exchange operator has previously said that if it moves forward with bitcoin futures, its product will be different from those offered by Cboe and CME.
Some crypto experts believe there are advantages to the physically-backed structure for bitcoin ETFs.
“When an ETF wants to create new shares of its fund, it turns to someone called an authorized participant (AP) for help. An AP is just a fancy name for someone who is responsible for purchasing the underlying assets an ETF wants to hold. APs require a license from the ETF provider and are typically financial institutions with a lot of purchasing power,” according to CryptoSlate. “For Bitcoin ETFs, the APs have the option of sending over baskets of cash instead of Bitcoin. This is simply for convenience as many APs don’t want to purchase Bitcoin and hold on to it themselves.”
For more information on the cryptocurrency market, visit the Bitcoin category.