Valkyrie has recently made a bold move by applying to the US Securities and Exchange Commission (SEC) to incorporate Ethereum (ETH) futures contracts into its Valkyrie Bitcoin Strategy ETF (BTF). This decision sets Valkyrie apart from other market players who have solely applied to launch their own dedicated Ethereum Exchange-Traded Funds (ETFs). By including exposure to ETH futures contracts in their existing investment strategy, Valkyrie aims to stay ahead in the ever-evolving cryptocurrency market.
While the final approval of these Ethereum ETFs and the order in which they will be approved remains uncertain, Valkyrie plans to introduce its double-barreled approach on or around October 3rd, effectively putting it ahead of its competitors. Emphasizing this competitive advantage, Valkyrie’s filing states that the fund’s name is expected to change to “Valkyrie Bitcoin and Ether Strategy ETF” around the same time. The ETF will continue to trade on The Nasdaq Stock Market LLC under the ticker symbol “BTF”. However, the proposed changes are contingent upon the effectiveness of the Trust’s Post-Effective Amendment No. 23 under the Securities Act of 1933, which was filed with the Securities and Exchange Commission on August 4th, 2023.
According to SEC Rule 485(a), if none of the applications for Ether ETFs are denied, fund managers can launch their products 75 days from the filing date. Based on this timeline, Valkyrie’s proposed launch on October 3rd will be the earliest among its competitors. If the SEC approves Valkyrie’s application, the first competitor to launch an Ether ETF will have to wait until October 12th (nine days after Valkyrie’s proposed launch). This first-mover advantage can be crucial in the cryptocurrency market, as previous examples have shown.
In October 2021, Valkyrie launched its Bitcoin fund, but it was not the first to do so. ProShares had already introduced its Bitcoin Strategy ETF (BITO) at that time. Undoubtedly, the fact that BITO beat Valkyrie to the market contributed to its greater success. BITO currently manages over $1 billion in assets, while BTF lags behind with approximately $30 million in assets under management (AuM). Recognizing this historical trend, Valkyrie aims to rectify its past by being at the forefront of the Ethereum market.
Following the Footsteps
Valkyrie’s approach is not entirely unconventional. ETF Managers Group has previously taken a similar path by converting a Latin American real estate ETF into the ETFMG Alternative Harvest ETF (MJ). This conversion allowed them to become the first in line to launch marijuana ETFs in the US. This strategy has drawn parallels to Valkyrie’s current endeavor, illustrating that leveraging existing funds can be a viable tactic to enter new markets and gain a competitive edge.
With the cryptocurrency market rapidly evolving, Valkyrie’s decision to include Ethereum futures contracts in its Bitcoin Strategy ETF demonstrates its commitment to staying ahead of the curve. By seeking SEC approval to be the first to offer an Ethereum-focused ETF, Valkyrie aims to capitalize on the growing interest in cryptocurrencies and expand its product offerings to meet investor demand. Whether Valkyrie’s calculated gamble will pay off and secure its position as an industry leader remains to be seen, but one thing is certain: the cryptocurrency market continues to provide exciting opportunities for those willing to take bold steps.