The rise of ProShares Bitcoin Strategy ETF in the past year despite lacking direct exposure to Bitcoin indicates a huge demand for spot BTC ETF.
ProShares, an established issuer of exchange-traded funds (ETF) with over $65 billion in assets under management, has recorded notable growth in its ProShares Bitcoin Strategy ETF (NYSEARCA: BITO) since its inception in October 2021. As of this report, the BITO fund reported an average monthly trading volume of about $22 million and over $2.2 billion in assets under management (AUM). However, for an investor who put a $10,000 bet on BITO during its inception, the current portfolio value would be around $6,889 despite the impressive Bitcoin performance in 2023.
ProShares on the Bitcoin ETF Market
Notably, BITO’s fund managers do not tap on the spot Bitcoin directly, thus a dismal guarantee of future performance. According to the company’s official website, 59.2 percent of the BITO funds have been allocated to the CME Bitcoin Fut Non-Equity Index which expires on 23 Feb 2024. About 40.71 percent of the BITO fund is invested in CME Bitcoin Fut Non-Equity Index (BTCF4 CURNCY) which expires on January 26, 2024.
“Many have pointed to speculation regarding a spot Bitcoin ETF as the driver of bitcoin’s price appreciation, but it’s worth noting that bitcoin was rallying for much of 2023 even in the face of the crypto-related bank issues in March, rising interest rates, and other ‘challenges’ at bitcoin exchanges,” Simeon Hyman, ProShares global investment strategist, noted.
Meanwhile, the company also provides an opportunity to investors seeking to benefit from falling crypto prices through the ProShares Short Bitcoin Strategy ETF (NYSEARCA: BITI). As of this report, the company BITI had about $58 million in total assets
“At the same time, the increased interest around bitcoin calls to mind that it can be challenging and expensive to obtain short exposure to cryptocurrencies. BITI and SETH, futures-based short bitcoin and short ether ETFs, respectively, are available in brokerage accounts today, and are the only ETFs in the US for investors who seek an opportunity to profit when the price of bitcoin or ether declines,” Hyman added.
Spot ETF Frenzy
The inevitable approval of spot Bitcoin ETFs in the United States will significantly challenge the futures markets in the subsequent years. Moreover, spot Bitcoin ETFs will be issued by reputable fund managers with deep liquidity led by Fidelity, Ark Invest, and BlackRock Inc (NYSE: BLK). Meanwhile, Bitcoin’s volatility has continued to spike with the highly anticipated decision from the US SEC. According to the latest market data, Bitcoin price briefly teased $48k after a false alarm on spot Bitcoin ETF approval was raised by the SEC on Tuesday evening.