Spot-Bitcoin ETF To Trade at Eye-Popping 8% Premium, GTS’s Browne Says

Emily Graffeo and Katie Greifeld, Bloomberg News

(Bloomberg) -- A spot-Bitcoin exchange-traded fund would trade at a meaningful premium to its net asset value, according to Reggie Browne.

The head of ETF trading at market-maker GTS told Bloomberg TV on Monday that a fund, if approved, could see an 8% premium to the value of underlying holdings. Compare that with BITO, an ETF which holds futures of the cryptocurrency and is formally known as the ProShares Bitcoin Strategy ETF, with an average premium over the past year of 0.02%.

“The spread width is not the concern, I think it’s going to be the premium above NAV,” said Browne. “It will be some crazy number.”

The Securities and Exchange Commission is loathe to let broker dealers directly trade spot Bitcoin. That, according to Browne, could make it more difficult for broker dealers to trade the ETF since they will need to use Bitcoin futures to hedge their positions when making markets in the fund.

That added level of complexity may make it difficult to keep the ETF’s price in line with the underlying Bitcoin, resulting in a meaningful premium to NAV.

Browne’s comments come as a Wednesday deadline looms for the SEC to take action on at least one of the nearly dozen spot-Bitcoin ETF applications

Browne also said that he expects investors to add at least $2 billion to spot Bitcoin ETFs within the first 30 days they trade, if approved. For the full year, he sees $10 billion-$20 billion in the funds.

“While we’re going to celebrate today, I think the morning after will come with all the details,” he said.