{"id":7743,"date":"2021-10-20T09:00:53","date_gmt":"2021-10-20T13:00:53","guid":{"rendered":"https:\/\/navesinkinternational.com\/?p=7743"},"modified":"2023-12-20T02:53:21","modified_gmt":"2023-12-20T07:53:21","slug":"the-hidden-costs-of-the-new-bitcoin-etf","status":"publish","type":"post","link":"https:\/\/navesinkinternational.com\/2021\/10\/20\/the-hidden-costs-of-the-new-bitcoin-etf\/","title":{"rendered":"The hidden costs of the new Bitcoin ETF"},"content":{"rendered":"<p><img fetchpriority=\"high\" decoding=\"async\" class=\"wp-image-7746 alignright size-medium\" src=\"https:\/\/navesinkinternational.com\/wp-content\/uploads\/2021\/10\/BITO-Listing-300x225.jpg\" alt=\"BITO-Listing\" width=\"300\" height=\"225\" srcset=\"https:\/\/navesinkinternational.com\/wp-content\/uploads\/2021\/10\/BITO-Listing-300x225.jpg 300w, https:\/\/navesinkinternational.com\/wp-content\/uploads\/2021\/10\/BITO-Listing.jpg 400w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/>Heavy demand for the first bitcoin ETF, which was listed yesterday.<\/p>\n<p>With $700m of trading volume, BITO attracted way more interest than the first S&amp;P 500 ETF on its first day.<\/p>\n<p>&nbsp;<\/p>\n<p>But be wary of hidden costs!<\/p>\n<ul>\n<li>The <span style=\"text-decoration: underline;\">expense ratio<\/span> (management fee) of 0.95%. That level would not be that high for esoteric assets, BUT the fund is <span style=\"text-decoration: underline;\">not trading any esoteric asset<\/span>. It is investing in CME-listed futures. So it is a <span style=\"text-decoration: underline;\">high-margin product<\/span> for the issuer.<\/li>\n<li>More importantly, because the fund invests in futures, not in cash, it is exposed to the futures&#8217;s repo (aka the rolling cost). The <span style=\"text-decoration: underline;\">repo trades around 17% right now<\/span>. <span style=\"text-decoration: underline;\">The fund will lose 15-20% per year<\/span> in rolling costs! That makes it a VERY expensive vehicle.<\/li>\n<li>It will place its cash in T-Bills (&lt;1Y), aka earn virtually no interest, but that&#8217;s standard these days.<\/li>\n<li>Its <span style=\"text-decoration: underline;\">tax efficiency is still imprecise<\/span>, and they could pass through to you. <span style=\"text-decoration: underline;\">You may end up with tax bills as a shareholder<\/span>.<\/li>\n<\/ul>\n<p>Oh, did I forget this? There is some imprecision on the long-term value of its asset and you should expect some volatility&#8230;<\/p>\n<p>&nbsp;<\/p>\n<p><iframe style=\"background: white;\" src=\"https:\/\/www.coindesk.com\/markets\/2021\/10\/19\/first-bitcoin-futures-etf-bito-nears-1b-trading-volume-on-first-day\/\" width=\"100%\" height=\"650\"><\/iframe><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Heavy demand for the first bitcoin ETF, which was listed yesterday.<br \/>\nBut be wary of hidden costs. BITO is an expensive ETF to carry.<\/p>\n","protected":false},"author":1,"featured_media":7746,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[329,14,12,11],"tags":[197,325,126,52,35],"acf":[],"_links":{"self":[{"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/posts\/7743"}],"collection":[{"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/comments?post=7743"}],"version-history":[{"count":1,"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/posts\/7743\/revisions"}],"predecessor-version":[{"id":13001,"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/posts\/7743\/revisions\/13001"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/media\/7746"}],"wp:attachment":[{"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/media?parent=7743"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/categories?post=7743"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/navesinkinternational.com\/wp-json\/wp\/v2\/tags?post=7743"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}