Dying for a Bitcoin Futures ETF? Watch Out for ‘Contango Bleed’

Posted on by American Coins & Gold

Dying for a Bitcoin Futures ETF? Watch Out for ‘Contango Bleed’
Improved prospects of the U.S. approving a futures-based bitcoin (BTC) exchange-traded fund (ETF) has brought cheer to the crypto market.However, the fund may fail to match bitcoin’s price performance thanks to a scary-sounding market dynamic known as “contango bleed.” This refers to fund underperformance that could theoretically occur because longer-dated futures contracts are trading at higher prices than shorter-dated contracts.In commodities markets, it’s considered normal for prices on longer-dated contracts to trade above those on shorter-dated contracts; this is known as “contango.” The price spread often roughly correlates with the cost of storage – such as for oil or soybeans.…