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How Does High Volatility in Bitcoin’s Price Affect the Tracking Error of the ETF?

High volatility increases tracking error by complicating NAV calculation and exacerbating futures curve effects.
Greeks.Live04.11.25

How Does High Volatility in Bitcoin’s Price Affect the Tracking Error of the ETF?

High volatility can increase the tracking error of a Bitcoin ETF. In a spot ETF, high volatility can make it harder for the fund manager to execute trades at the exact closing price used for NAV calculation.

In a futures ETF, high volatility can exacerbate contango or backwardation effects and increase the cost of rebalancing, further widening the gap between the ETF's performance and the spot price.

What Is the ‘Significant Market’ Test That the SEC Applies to a Spot Bitcoin ETF Application?
What Is an Exchange Traded Fund (ETF) Related to Bitcoin Futures?
What Are the Regulatory Hurdles for Approving a Spot Bitcoin ETF Compared to a Futures Bitcoin ETF?
How Does the Regulatory Status of Bitcoin Itself Affect ETF Approval?

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