(Insider) A new type of exchange-traded fund sprang into the public markets this week with the arrival of ETFs tied to bitcoin futures.

Bitcoin futures ETFs invest in contracts used to speculate on future prices for bitcoin. They can be purchased and sold like a stock and don’t require buyers to hold an account at a cryptocurrency exchange or to have a crypto wallet.

The ProShares Bitcoin Strategy ETF, which tracks CME bitcoin futures, launched on Tuesday and quickly pulled in $1 billion in assets under management. Valkyrie’s Bitcoin Strategy ETF began trading Friday and asset management firm VanEck’s Bitcoin Strategy ETF looks set to debut next week.

“When you look at the market and its entirety, bitcoin is … one of the best-performing assets in history,” Christopher Perkins, president of blockchain-focused investment firm CoinFund, told Insider this week. “Now, as I look at this asset class, you have to ask yourself, if you’re an investment manager, ‘What’s the reputational risk of not being able to have exposure to the best-performing asset in eight of the last 10 years?'” he said.

As companies bring their products to market, Insider talked to three experts about the advantages and disadvantages of buying bitcoin-futures ETFs, the digital coin itself, or stocks in companies with exposure to bitcoin.

Bitcoin-futures ETFs

While the debut of the futures ETF was a momentous occasion for the crypto market, there are some important differences and complexities investors should be aware of.

According to Naeem Aslam, chief market analyst at AvaTrade, for mom-and-pop investors, “this is not the ETF for them.”

“A futures market trades on margin because you don’t have the actual product, you are trading on a synthetic price movement,” he said, and investors should anticipate that the price of bitcoin futures can differ from spot bitcoin prices.

While bitcoin futures ETFs give investors some bitcoin exposure they have “deficiencies” and can be complex products for many retail investors, said William Cai, a partner at investment firm Wilshire Phoenix, which has an application for a registered spot-bitcoin product under review at the SEC.

The key characteristic of futures markets is that contracts have expiration dates, said Cai, who previously traded commodities futures and other assets during his more than 10 years at JPMorgan. A fund has to roll contracts, meaning selling out the closest future before it expires, and then buy the next one.

“This process runs into trading costs and the potential for front-running issues where other market participants know you are going to do this and they can … position it to take advantage of your actions,” said Cai.

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