EDIT: THIS IS NOT A RECOMMENDATION TO BUY THE FUTURES ETFs. THIS IS JUST A LIST OF REASONS OF WHY BITCOIN PRICE CAN ULTIMATELY BENEFIT FROM HAVING THEM COMPARED TO NOT HAVING THEM AROUND.
We have seen in the last few weeks a lot of bashing on the recently approved ETFs (so far, ProShares, which has been launched, plus Valkyrie and VanEck, which will launch tomorrow and next week respectively). I do not disagree with any of the arguments around (apart from occasional "duh they gonna suppress price through paper BTC" argument, which is simply wrong - I explain that in my first point in the following). Now I proceed to list a few GOOD things about a futures ETF in comparison to a spot ETF, mostly because I've seen no one mentioning those so far. Again I stress that I agree with the arguments for why spot > futures. No need to repeat them and say that futures is shit and spot is good because I agree with that. I am just presenting a silver lining here given what we have in the markets now.
I) The Futures ETF, by not requiring the ETF issuer to hold bitcoin but just future contracts from a particular exchange, is more easily auditable. The daily open interest on bitcoin futures at the CME can be checked at https://www.cmegroup.com/markets/cryptocurrencies/bitcoin/bitcoin.volume.html, making it very difficult for the ETF issuer to increase the ETF shares supply without going long on the futures contract. With a spot ETF, you need to trust the issuer (or the custodian) holds the bitcoins because they very likely will not reveal the address where the bitcoins are (for either security reasons or regulation reasons, or both).
II) With the Futures ETF, there is ZERO risk the coins can be stolen, confiscated, or lost, because they hold no coins. By holding a contract that provides exposure to the underlying, the "carrying risk" is held by those buying spot and shorting futures to capture the premium. One of the main sources of this premium (in addition to the time value of money), which is not small and is the main disadvantage of the futures ETF) is precisely having to manage the security by your own.
III) With the Futures ETF, you can benefit in the short term by a rapid increase in BTC prices. While a spot bitcoin ETF would ideally perfectly track the bitcoin price, the Futures ETF track future contracts. The futures premium over spot can increase over short time periods, providing a higher return than simply holding bitcoin spot.
IV) With the bitcoin futures ETF, you can benefit from shifts in interest rates, should them ever occur. If the interest rates go down, the new future contract will trade at a lower price than they would otherwise. When rolling them, the "contango bleed" (the loss by selling a close to spot futures to buy an above spot futures expiring at a later date) will be reduced. If the interest rates go up, those holding the ETF will instantly benefit as the futures premium increase. Over time though, they will lose as the contango bleed increases. Admittedly, this is a very limited benefit because it goes away over time.
V) If there is a big crash, you can benefit from an "inverse contango bleed"/carrying premium as futures may trade at a lower price than spot. For those holding the ETF through the crash event though, their losses can be magnified (although not necessarily: the futures price might decrease less than the spot price). This is not necessarily an advantage as it has a good and bad side but, with the futures ETF you have the possibility to have, at some point, a carrying premium. With a spot bitcoin ETF, this cannot happen.
VI) Many institutional investors are restricted from taking positions in foreign-traded ETFs either by regulation or by mandate, so the futures ETF is all they have. Same for some individuals. Again, not exactly an advantage over spot, but an advantage over nothing nevertheless. An hypothetical advantage over spot in that regard is that some institutional investors might be restrained from investing in some "riskier" ETFs, which in terms of security as explained in I) might be the case of the spot ETF but not the futures ETF. I admit however that this is a very speculative reasoning.
VII) Due to the return on the cash holdings (a futures ETF typically holds cash/treasuries and go long on future contracts), a futures ETF might offer a lower effective total expense ratio/management fee than the spot ETF (particularly if interest rates rise one day). Even if they do not rise though, a small return will be earned in the cash, which is not the case of the spot ETF. Additionally, due to competition with spot ETFs in the future, the futures ETF issuers might be able to reduce their fees even further, capturing some market share from spot ETF issuers and benefiting investors.
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