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Valkyrie Bitcoin Strategy ETF launches to rival BITO

In this article:
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Leah Wald, Valkyrie CEO joins the Yahoo Finance Live panel to discuss the lauch of Valkyrie Bitcoin Strategy ETF.

Video Transcript

ZACK GUZMAN: Welcome back. In today's Crypto Corner, focusing in on the second Bitcoin futures linked ETF to list here in the US. Of course, ProShares got the party started a bit earlier in the week. And now, on the NASDAQ, we are seeing Valkyrie's Bitcoin strategy ETF, ticker BTF, trade, falling slightly here off more than 4% in that debut, as Bitcoin's price falls back down a bit from those all-time highs.

And for more on the launch, I want to bring on the CEO of Valkyrie here. Joining us is Leah Wald. And Leah, when we look at it, you know, they say it's not bad to be second here. And you guys are doing this. There's a lot of differences, though, as we might see eight potentially here by the end of the year in Bitcoin futures linked ETFs. Talk to me about what sets Valkyrie's version apart and what you're hoping investors maybe grasp about the opportunity here.

LEAH WALD: Yeah, and thank you for having me on. In most cases, being first does mean a lot. In this case, however, we feel it means a little less. We, of course, wanted to be the first, but honestly, as a newcomer, we're realistic about the challenges we face from an awareness and track record standpoint. That said, we believe that demand is strong enough to bring two or three Bitcoin futures ETFs to roughly the same AUM, given enough time. And then investors will ultimately decide which firm best fits their values. And that's the one they'll eventually pull ahead of the pack.

I think that what makes Valkyrie so different from ProShares is, again, ProShares is in the ETF business. They're an ETF mill, whereas we are a crypto native, crypto asset manager that's embedded and ingrained in the industry. We know the ins and outs. And I think that a lot of the especially retail markets sees those nuances.

ZACK GUZMAN: Yeah, you guys kind of flexed that crypto understanding here with the original ticker, BTFD. Buy the f-ing dip, if I can say that on air here, and then before changing it back. When you look at it, though, I guess that is the question. When we talk about fees, looks like VanEck might come through with a little bit lower fee than what we saw from ProShares and you guys.

But the question of how you kind of manage the demand, right, in terms of the caps and how many futures one of these ETFs can actually hold, contracts ETFs can hold depending on how much money flows in, I mean, how key is that in terms of trying to track the underlying Bitcoin spot price since you can't have a straight up Bitcoin spot ETF just yet?

LEAH WALD: Correct, and good question. I think a lot of people have been asking today about position limits and how they affect the ETF. You know, again, I think that the more ETFs that enter the Bitcoin futures market, the less of a concern position limits become. And that's mainly because there will be more whales in these markets, which should make it harder for one participant to control the market. So we're of the opinion that diversification is good, whether it be for our investors or for the markets. And we think that those limits that you're speaking about and how that will affect tracking error and other potential measures will even out over time.

AKIKO FUJITA: If you look at the success, if you can call it that already in the first few days for several days of ProShares's ETF debut, I mean, they've raked in, what, more than a billion dollars in assets under management. And I wonder when you look at that, you look at your entry, you think that puts the pressure on the SEC to approve spot ETF, which, you know, some would argue is what could really change the game.

LEAH WALD: Interesting. Yeah, and our volume's done quite well today as well. So definitely the SEC is looking. I think that the futures ETF is an incredible first step. To your point, we filed our spot Bitcoin ETF way back in January, January 22nd. We do think that that is the holy grail, but we don't think it's going to be approved anytime soon.

So I think that the SEC is going to be watching this week very closely. They're going to be considering how this goes, what are the next steps, whether it's moving from a 40 Act wrapper currently to a 33 Act wrapper for the Bitcoin futures, and/or down the line to spot. So I think that they are very much following the market movements.

ZACK GUZMAN: Yeah, I guess, I mean, this is the big question for me, too, how it impacts the broader space, right? And we saw-- I don't know how much we can connect the dots between ProShares's launch and then Bitcoin hitting the all-time high there. But to your point, it does seem like a more nuanced crypto investor out there might choose to just hold Bitcoin and use it the way that you can now on a few platforms, including in DeFi, to earn yield rather than hold a share in a futures-linked ETF.

So I mean, how do you maybe differentiate the product here? When we talked with ProShares, I may even called ageist in assuming that there might be older investors who don't just want to hold Bitcoin here, but want something simpler. I mean, how do you see it fitting into specifically yours in maybe this broader adoption cycle and who it's meant for?

LEAH WALD: Yeah. Well, that's a quite nuanced question. And I think all of the different nuances are very important. First, I think you're bringing up the question, why choose this fund over directly owning spot Bitcoin when, again, it's becoming a bit easier in the US? I think that that's more of a simple question or a simple answer. There can be more efficient price discovery. Bitcoin is not a regulated asset in the US, but CME futures are. Getting that satisfies any concerns people or regulators have around wash trading and inaccurate data.

And again, no need to worry about risks around security and custody, which are still very difficult, and the full faith of, again, an SEC-regulated NASDAQ-traded ETF. I think that even though the adoption is growing in the US for Bitcoin, for Bitcoin products, whether they're private placements or the success of the ETFs this week, I still think that there are barriers to owning physical that are a bit insurmountable, especially for institutions right now. So I think that these ETFs are going to very much alleviate that.