The Long Way to Cryptocurrencies Commoditization: Learning from Bitcoin ETF Prices?

Abstract

Investors in cryptocurrencies have long called for direct exposure to stock markets, but the volatility of the asset and possible fraudulent manipulations raise concerns. This article compares the price predictions of spot bitcoin ETFs listed in Canada and Switzerland using the autoregressive integrated moving average (ARIMA) model and the long short-term memory (LSTM) neural network. The article also delves into the regulatory challenges preventing the commoditization of cryptocurrencies and favoring the futures markets channel. We investigated the bitcoin-futures ETF listed on the Chicago Mercantile Exchange (CME). Notwithstanding that the forecasts obtained through the LSTM are better for Canadian and Swiss ETFs, neither the tracking differences nor the basis risk can be incriminated beyond a reasonable doubt. More importantly, our results show no evidence against trading cryptocurrencies in stock exchanges.