- ProShares Bitcoin Strategy ETF (BITO) has surged past the $2 billion mark, fueled by the frenzy around the pending approval of the spot ETF, which, ironically, could be its biggest threat.
- ProShares says that its futures ETF has been growing rapidly even before the rumours on the spot ETF blew up and that Bitcoin’s growth transcends the short-term rumour mill.
All the headlines in the past month have been about the Bitcoin spot ETF, with experts and market insiders predicting it could be approved any day. However, while the spot ETF gains all the attention, the Bitcoin futures ETFs have been on a roll, with the most renowned, the ProShares Bitcoin Strategy ETF (BITO), breaking $2 billion in assets under management yesterday.
Launched in October 2021 by the Maryland-based ETF issuer ProShares, BITO is the world’s largest crypto ETF. Within days of its launch, the ETF hit a billion dollars in assets as investors piled on to bet on BTC. However, unlike the upcoming spot ETF, BITO doesn’t invest directly in Bitcoin; instead, it invests in and tracks Bitcoin futures.
The ETF hit an all-time high yesterday, January 9, with the company revealing that its assets under management (AUM) had grown 10% in the past week and by close to 20% in the past month, having held $1.7 billion in mid-December. In the past year, the AUM has shot up by 250% from $560 million in January last year, with the collapse of the FTX exchange dealing a big blow to the ETF.
BITO Soars, But Will a Spot ETF Spell Its Doom?
Speaking to one outlet, the fund’s global investment strategist, Simeon Hyman, revealed that the AUM growth for BITO is not just down to speculation on the spot ETF. He pointed out that BITO’s growth is tied to the spike in Bitcoin interest due to macroeconomic factors. He stated:
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.
Hyman further believes that futures ETFs have diversity that spot ETFs simply couldn’t have. For instance, ProShares offers two other ETFs—BITI and SHETH—which allow investors to go short on BTC and Ether, respectively.
The two ETFs “are available in brokerage accounts today and are the only ETFs in the U.S. for investors who seek an opportunity to profit when the price of bitcoin or ether declines,” he noted.
While Hyman projects confidence that his product can withstand the expected onslaught from a spot ETF, not many hold a similar view.
“I don’t think there’s much life for that product after spot bitcoin launches,” says WisdomTree’s Will Peck. He says he sees no reason any financial adviser or deep-pocketed investor would hold a futures ETF when spot ETFs become available. Wisdom Tree is one of the companies that have applied for the spot ETF alongside Grayscale, BlackRock and Fidelity.
