[dcolkitt]

Bitcoin futures are correlated but nowhere near a 1:1 proxy for spot markets. Crypto markets are known for very steep "contango" in the curve, and it's not unusual for the price of the 30 days futures to be more than $1000 away from the current Bitcoin price.

The issue isn't just additional volatility and tracking error, but the fact that the con tango creates a "roll yield" which affects the long-term returns of the strategy. To keep constant maturity exposure, the futures ETF has to constantly "roll" its positions into further dated contracts. In particular because the market tends to be in contango it means further dated futures tend to be higher priced than near dated futures. So usually the futures ETFs in their daily rebalancing are selling cheap near dated contracts for more expensive longer dated contracts. Hence the roll yield tends to be negative. Then add all the transaction costs from daily rebalancing. It should be clear why the futures strategy has inferior returns to simply holding spot.

Spot Bitcoin ETFs truly are a game changer compared to futures ETFSs.