BITO’s Rocky Road Since Launch
In the wild world of cryptocurrency, not every star shines forever. The ProShares Bitcoin Strategy ETF (BITO) had a dazzling debut, but it’s now experiencing a case of the fizzles as interest seems to fade quicker than that last piece of pizza at a party. The fund is currently reporting only 4,904 Chicago Mercantile Exchange (CME) futures contracts—its lowest since November 2021. Talk about a punch in the crypto gut!
From Boom to Bust: The Numbers
When BITO launched on October 18, it set records by being the quickest fund to hit $1 billion in assets under management (AUM). Remember the good ol’ days when its AUM soared to $1.4 billion? Fast forward to now, and that number has deflated to a meager $1.16 billion—roughly the same value it had two days post-launch. It’s like taking two steps forward, only to fall flat on your face.
Why the Decline? Blame Bitcoin’s Slump
So, what caused this sudden drop in interest? According to Arcane Research’s latest Weekly Update, the primary culprit is the price performance of Bitcoin itself. Once riding high at nearly $69,000 in November, BTC has since taken a nosedive to approximately $43,700. That’s a steep drop that would make even the hardiest of investors cringe.
The Cost of Futures: Heavy on the Wallet
Aside from Bitcoin’s volatility, another reason for BITO’s dwindling popularity could be the expensive nature of futures-based ETFs. Arcane notes that every month, BITO has to sell its front-month exposure to purchase the next-month contract as the expiration date approaches. This delightful little dance comes at a price, contributing to the rising operational costs. Imagine paying your rent in pizza slices, only to find out that each slice is costing you an arm and a leg!
The Hope for a Spot-Based ETF
If you’re wondering whether there’s a knight in shining armor on the horizon, the answer could be a spot-based Bitcoin ETF. Unlike futures ETFs, such a fund wouldn’t be burdened with the hefty rolling costs. However, SEC approval for any spot-based ETFs has yet to pass, with Fidelity Investments waiting for a ruling next Thursday. It’s like waiting for the final episode of your favorite show—anticipation mixed with a touch of skepticism.
Comparing the Competition: BITO vs. Others
BITO isn’t alone in this sinking ship; other Bitcoin futures ETFs also have lackluster AUMs. Take Valkyrie’s Bitcoin futures ETF (BTFD), which is limping along with only $71.9 million in assets—talk about a fraction! Even the VanEck Bitcoin Strategy ETF (XBTF) barely made a dent, boasting only $15.8 million despite gaining $6 million since its launch on November 16. It seems like everyone’s got the Bitcoin blues.
Final Thoughts: The Future of Bitcoin ETFs
While BITO’s rising and falling fortunes remind us that the crypto market is a fickle friend, it’s essential to stay informed. Whether you’re an investor or just a crypto curious observer, keep your eyes peeled for developments, especially regarding potential spot-based ETFs. Who knows? The next big thing could be just around the corner, or it could be another heavy flop. Just remember: in crypto, it’s all about the ride.
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