Investor Raoul Pal believes that Bitcoin futures contracts could only be a good idea in the short term. He recommends buying BTC directly on an exchange and holding it in the long run.
Bitcoiners want to own and safeguard their holdings of Bitcoin (BTC) to get financial exposure to the cryptocurrency without intermediaries. They believe that exchange-traded funds (ETFs) based on that asset do not allow doing it.
Renowned investor Raoul Pal stated that an exchange-traded fund in futures contracts based on Bitcoin goes against the desire of users to safeguard their coins.
Given that BTC is a digital and easily safeguarded asset, Pal thinks an ETF based on Bitcoin does not make sense. However, he considers that commodities such as oil and gas do, despite being difficult to store, transport, and protect.
It is Better to Purchase Bitcoin on an Exchange and Hold It in the Long Term
Pal explains that exchange-traded funds would build a fortune from arbitrating the price of BTC and the futures contract. The investor recommends buying BTC on an exchange and holding the asset in the long term.
The businessman said that people could go to the exchange and buy BTC just by paying a small fee to the platform. He considers that, in that way, users can safeguard their holdings without involving anyone else being in the process.
He noted that, with those investment vehicles, those doing the arbitration receive their fees. He added the ETF itself, the lawyers, the administrators, and the auditors get their share.
The investor criticized the US Securities Exchange Commission (SEC) for allowing those futures contracts, expressing his concern about investors. He said that they are helpful in the case of commodities, which are not storable, but he sees no point in ETFs based on Bitcoin.
If Investors Own their Key Phrases, the Coins Belong to them
Bitcoin entrepreneur and promoter Preston Pysh agreed with the comments from Raoul Pal. He said that if people did not do the hard work to understand the things they have, their purchasing power would become worse.
Macroeconomist Lyn Alden explained that the exposure to a futures contract is not the same as the ownership of the underlying asset. She believes that futures-based commodity ETFs are decent for short-term investments. However, she considers them not very profitable for those with a bullish sentiment about the underlying asset.
The SEC recently approved the first exchange-traded fund based on BTC after several days of expectation. That may have made the price of the pioneering cryptocurrency go up. Some analysts stated that this could be the starting point for the approval of a Bitcoin ETF based on the market value of the crypto asset.
Bitcoin is trading at around USD 62,000 and has accumulated a 13.1% profit in the past seven days, according to CoinGecko. Its daily trading volume is above USD 40 billion, while its market capitalization is approximately USD 1,168 billion.
By Alexander Salazar
