Research > ETFs > ETF / ETP Commentary > 

Why Bitcoin Futures Fit Well in This Commodities ETF

In one of the exchange traded funds industry’s most widely anticipated events in recent memory, at least one bitcoin futures ETF is coming to market, and that could soon be followed by several more.The ProShares Bitcoin Strategy ETF (BITO) is linked to bitcoin futures, and it’s expected that several following funds that could be approved and debut soon will follow a similar approach. Noting that bitcoin futures have been around for several years, the market is increasingly robust, and related ETFs are coming to market, it makes sense that some futures-based commodities ETFs want in on the act.The WisdomTree Enhanced Commodity Strategy Fund (GCC B) already joined the party as WisdomTree announced last week that the actively managed GCC could allocate up to 5% of its weight to bitcoin futures.Bitcoin’s inclusion in commodities ETFs like GCC could further stoke the “digital gold” conversation.“The 3% allocation to bitcoin futures was made from the Fund’s position in gold, which stands at approximately 9% after the rebalance. This move was motivated by the view that bitcoin is often compared to ‘digital gold’ as a store of value and use case, which is being expressed for GCC bitcoin futures,” says WisdomTree analyst Jianing Wu.While the supply of bitcoin is fixed and, at least in theory, the same isn’t true of gold and other commodities, there are still supply and demand dynamics at play with bitcoin, making it a logical addition for ETFs like GCC.“Going forward, bitcoin’s pricing could gradually shift toward the demand side, similar to gold’s, which depends on how much the system is used and how successful it is in evolving into a store-of-value vehicle,” adds Wu. “However, investors who believe in such, must have an appetite for short term volatility and risk. The risks such as regulatory uncertainties, price speculations, and technological development difficulties must be kept in mind of.”Another reason the pairing of GCC and bitcoin makes sense is that, historically, commodities aren’t highly correlated to equities. Since the end of 2017, the Bloomberg Commodity Index has had a correlation of just 0.60 to the S&P 500, but bitcoin is even lower at 0.32.“We view bitcoin futures as a potentially compelling asset for addition to a commodity strategy such as GCC that seeks to provide returns uncorrelated with equities and fixed income. Historically, bitcoin has a correlation well below 0.5 against most major asset classes,” says Wu.For more news, information, and strategy, visit the Model Portfolio Channel.

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.