Valkyrie, a prominent investment firm, has recently filed an application with the US Securities and Exchange Commission (SEC) to incorporate Ethereum (ETH) futures contracts into its Valkyrie Bitcoin Strategy ETF (BTF). While a number of entities have also pursued the launch of their own Ethereum Exchange-Traded Funds (ETFs), Valkyrie’s approach stands out as it aims to expand its existing investment strategy to include exposure to ETH futures contracts. By taking this bold step, Valkyrie aims to position itself as a frontrunner in the cryptocurrency ETF market.
Staying Ahead of the Competition
Unlike its competitors, Valkyrie plans to proactively introduce its dual investment strategy on or around October 3, 2023, effectively placing itself ahead of the pack in terms of launch dates. As part of the filing, Valkyrie also highlighted its intention to change the name of its fund to the “Valkyrie Bitcoin and Ether Strategy ETF” and continue trading on The Nasdaq Stock Market LLC under the ticker symbol “BTF”. However, these changes are contingent upon the approval of the Trust’s Post-Effective Amendment No. 23 by the SEC, which was submitted on August 4, 2023.
According to SEC Rule 485(a), if no applications for Ether ETFs are denied, the fund managers can launch their offerings 75 days from the respective filing dates. Following this timeline, the earliest launch date for any of the applicants (including the first applicant, Volatility Shares, which filed on July 28) would be October 12, a mere 9 days after Valkyrie’s proposed launch. Therefore, Valkyrie’s strategy to be the first-mover in this space could prove advantageous, as historical precedence suggests that such a position often leads to greater success.
Learning from Past Precedents
When reflecting on historical cases, it becomes evident that being the first to launch an ETF can play a significant role in its subsequent performance. In the case of Valkyrie’s Bitcoin Strategy ETF (BTF), which was launched in October 2021, it faced tough competition from ProShares, which had already launched its Bitcoin Strategy ETF (BITO) prior. Consequently, BITO currently boasts over $1 billion in assets under management (AuM), whereas BTF’s AuM stands at approximately $30 million. This disparity indicates the importance of timing and striving to be at the forefront of the market.
The concept of amending an existing fund to launch a pioneering product is not new. ETF Managers Group, for instance, previously converted a Latin American real estate ETF into the ETFMG Alternative Harvest ETF (MJ) to establish a position as the first mover in the US marijuana ETF market. This strategy, akin to the approach taken by Valkyrie, can prove fruitful in capturing market attention and gaining an early competitive advantage.
Valkyrie’s initiative to add ETH futures contracts to its existing Bitcoin Strategy ETF sets it apart from its competitors in the cryptocurrency ETF race. By strategically timing its launch ahead of others and capitalizing on the benefits of being the first-mover, Valkyrie aims to position itself at the forefront of the market. As the SEC reviews the various applications for Ethereum ETFs, it remains uncertain which offerings will receive approval and in what order. However, Valkyrie’s proactive approach and innovative investment strategy demonstrate its commitment to staying ahead of the curve in the ever-evolving world of cryptocurrencies.