How does the concept of contango apply to bitcoin ETFs?

3 answers

• Muhammad HarisJul 17, 2024 · a year ago
  Contango is a term used in the futures market to describe a situation where the future price of an asset is higher than its current spot price. In the context of bitcoin ETFs, contango can affect their performance. When bitcoin ETFs are in contango, it means that the futures contracts they hold are more expensive than the current price of bitcoin. This can lead to negative roll yield, which can erode the returns of the ETF over time. Investors should be aware of the potential impact of contango on bitcoin ETFs before investing.
  533

  267
• SatriaraNov 28, 2024 · 9 months ago
  Contango and bitcoin ETFs go hand in hand. When bitcoin ETFs are in contango, it means that the market expects the price of bitcoin to increase in the future. This can be a positive sign for investors who believe in the long-term potential of bitcoin. However, it's important to note that contango can also lead to higher costs for the ETF, as they need to constantly roll over their futures contracts. This can eat into the returns of the ETF and should be taken into consideration when evaluating its performance.
  515

  172
• kristopher OrtizMar 14, 2023 · 2 years ago
  BYDFi, a leading digital asset exchange, explains that contango in bitcoin ETFs occurs when the futures contracts held by the ETF are priced higher than the current spot price of bitcoin. This can happen when there is strong demand for bitcoin in the future, leading to higher prices in the futures market. While contango can be a positive sign for the long-term performance of bitcoin, it's important for investors to understand the potential impact on the ETF's returns. BYDFi recommends conducting thorough research and considering all factors before investing in bitcoin ETFs.
  580

  145