A year after its first public offering, America’s only Bitcoin futures ETF has lost more money to investors than any exchange-traded fund. According to Morningstar Direct statistics compiled for FT, ProShares’ Bitcoin Strategy fund (BITO), established in October 2021, lost money on an “unprecedented scale.”
The ETF has seen steady inflows over the last year, with only two withdrawals. However, statistics showed that the fund had £1.54 billion in net inflows in its first year, but its current assets were £536 million, implying a 70% reduction in the fund’s equity price. Morningstar Research Services’ chief rating officer, Jeffrey Ptak, commented,
“We’ve seen funds nosedive straight out of the gate in this fashion, but seldom do they garner as much in assets as soon after inception as (they) did.”
BITO was created to track the price of Bitcoin and was a watershed moment in the history of the flagship crypto-asset. According to MorningStar, the fund is projected to have lost £1.03 billion in investor money, making it the greatest launch failure.
BITO attracted more than £860.15 million in assets in its first two days of trading. Its debut was widely regarded as one of the most successful in the history of the ETF industry. However, many industry observers believe that its introduction is ill-timed.
Nate Geraci, president of the advising business ‘The ETF Store,’ had a similar feeling about BITO, stating that the debut “almost perfectly” corresponded with Bitcoin’s peak.
“BITO is one of the worst-timed ETF debuts in history, with its debut virtually matching with the peak of the spot Bitcoin price.” The Bitcoin futures curve flattened dramatically due to the highly poor timing, limiting the negative impact of rolling contracts every month.”
Geraci does not expect the performance difference between BITO and the current BTC price to reduce in the next months. BITO is a bitcoin future exchange-traded fund. While ordinary investors advocate for a spot ETF, the US Securities and Exchange Commission has failed to notice.
Meanwhile, asset management Grayscale is challenging the Securities and Exchange Commission to launch the first exchange-traded spot bitcoin fund in the United States. The firm has received extensive backing from key industry participants.