‘Ill-Timed” ProShares Bitcoin ETF Plunges Over 70%

As per the data com­piled from Morn­ingstar Direct for FT, the Bit­coin Strat­e­gy fund (BITO) launched in Octo­ber 2021 by ProShares lost mon­ey on an “unprece­dent­ed scale.”

The ETF has attract­ed con­sis­tent inflows through­out the past year, with only two with­drawals. How­ev­er, data sug­gest­ed net inflows of $1.8 bil­lion in its debut year, while its cur­rent assets were record­ed at $624 mil­lion, mean­ing a 70% drop in the fund’s equi­ty price.

Down 70%

Jef­frey Ptak, chief rat­ing offi­cer at Morn­ingstar Research Ser­vices, stated,

“We’ve seen funds nose­dive right out of the gate in this man­ner, but rarely do they attract so much in assets so soon after launch­ing like [this] did.”

BITO was designed to track the price of Bit­coin and marked a cru­cial step in the his­to­ry of the flag­ship cryp­to-asset. The fund is expect­ed to have lost $1.2 bil­lion of investors’ mon­ey, accord­ing to MorningStar’s cal­cu­la­tion, there­by mak­ing it by far the biggest debut loser.

Biggest Debut Loser

BITO man­aged to attract more than $1 bil­lion in assets in its first two days of trad­ing. Its launch was her­ald­ed among the most suc­cess­ful in the his­to­ry of the ETF indus­try. How­ev­er, its debut is often con­sid­ered ill-timed by many indus­try prognosticators.

Nate Geraci, pres­i­dent of an advi­so­ry firm, ‘The ETF Store,’ also echoed a sim­i­lar sen­ti­ment on BITO, cit­ing that the launch “near­ly per­fect­ly” coin­cid­ed with Bit­coin top­ping out.

“BITO is one of the most ill-timed ETF launch­es in his­to­ry, with its debut near­ly per­fect­ly coin­cid­ing with the price of spot Bit­coin top­ping out. The upside of that extreme­ly poor tim­ing is that the Bit­coin futures curve flat­tened out, min­i­miz­ing the neg­a­tive impact of rolling con­tracts every month.”

Geraci does not believe BITO’s per­for­mance gap with the spot BTC price could nar­row down in the com­ing months. BITO is a bit­coin futures ETF. While the retail investors call for a spot ETF, the Unit­ed States Secu­ri­ties and Exchange Com­mis­sion is yet to pay heed to the matter.

Mean­while, asset man­ag­er Grayscale is cur­rent­ly bat­tling with the com­mis­sion to bring the first exchange-trad­ed spot bit­coin fund to the US mar­ket. The com­pa­ny has gar­nered wide­spread sup­port from impor­tant indus­try players.