The manager overseeing the most substantial bitcoin futures ETF asserts that the fund will persist despite concerns that recently introduced spot bitcoin ETFs, attracting significant investor capital, might overshadow its existence.
The $1.9 billion ProShares Bitcoin Strategy ETF (BITO), the inaugural bitcoin ETF approved in 2021, encountered robust initial success, garnering $570 million on its debut. While it operates on trading bitcoin futures, it now faces competition from 11 spot bitcoin ETFs sanctioned last month, providing investors with direct exposure to daily cryptocurrency price fluctuations.
Simeon Hyman, ProShares’ Head of Investment Strategy, expresses optimism about the new funds. Despite increased competition, he believes the past month's performance has reinforced the enduring advantages of a futures-based approach. These benefits include operating in a regulated environment with efficient price discovery.
BITO experienced heightened trading activity following the introduction of spot bitcoin products, reaching a peak daily trading volume of 88.6 million shares on January 11. On February 1, the fund recorded 14 million shares traded, valued at approximately $298 million, surpassing the Grayscale Bitcoin Trust (GBTC) in trading volume, which traded about $291 million that day.
However, BITO has witnessed substantial outflows, with a significant outflow of $143 million on January 31. Since the introduction of spot bitcoin funds, the fund has seen outflows totaling $364 million. In contrast, the largest spot bitcoin ETF among the 11, BlackRock Inc.'s iShares Bitcoin Trust (IBIT), has attracted nearly $3 billion in investor funds.
Despite expectations that futures funds may wane in investor interest, similar to the decline of gold futures ETFs after the advent of a gold ETF, ProShares remains confident in the enduring appeal of their futures-based ETF. Hyman emphasizes the lasting advantages, market share perspective, and coexistence of BITO, predicting it will continue to have a significant market share for an extended period. ProShares remains optimistic about the broader adoption of Bitcoin in traditional asset allocations, anticipating growth for all participants in the market.