Bitcoin ETFs drive demand for borrowing in crypto markets
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Mismatch
between
cash
and
crypto
settlement
cycles
creates
pre-funding
challenge
Crypto
markets
are
grappling
with
the
cost
of
funding
bitcoin
purchases
by
cash-settled
exchange-traded
funds
(ETFs)
that
operate
on
a
T+1
cycle.
The
problem
is
a
symptom
of
the
mismatched
settlement
cycles
for
cash
and
cryptocurrencies.
When
investor
demand
for
a
bitcoin
ETF
rises,
firms
called
authorised
participants
(APs)
–
generally
banks
and
high-speed
trading
firms
such
as
JP
Morgan
and
Jane
Street
–
create
more
shares
by
sending
cash
to
the
fund
manager,
who
purchases
the
underlying
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