Interest Fades In Bitcoin Futures ETFs As Contracts Fall Below 5K

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After a remarkable launch, interest has weakened in the ProShares Bitcoin Strategy Exchange Traded Fund (BITO), which now has the lowest number of CME contracts since November 2021.

The Bitcoin exchange-traded fund (ETF) holds a total of 4,904 Chicago Mercantile Exchange (CME) futures, according to the fund’s latest update on January 11. A Bitcoin futures ETF allows investors to speculate on the future price of Bitcoin (BTC) without having to own the asset themselves.

BITO’s assets under management (AUM) figure fell to $ 1.16 billion from a peak of $ 1.4 billion last November. This is roughly the same amount he held two days after it launched on October 18, when it became the fastest fund to reach AUM’s $ 1 billion. never.

Arcane Research discussed the possible reasons for the BITO retracement in its last weekly update. As you might expect, the poor price performance of BTC over the past two months is the main explanation, as Bitcoins move further and further away from the $ 69,000 it hit on November 10 in its wake. current price of around $ 43,700.

Arcane suggests that another explanation for the declining interest in BITO is the high cost of operating a futures-based ETF, with the rolling costs required each month to stay ahead of price. current BTC, which drives up costs:

“BITO sells its first month exposure to buy the next month’s contract whenever the contract nears expiration.”

Arcane believes that a BTC spot ETF would not be subject to the same high fees that increase over time. The SEC has yet to approve such ETFs, but a decision on the filing by Fidelity Investments is expected to be made by January 20.

Other BTC futures ETFs have also failed to significantly increase their assets under management, which represent a fraction of BITO’s assets. Valkyrie’s Bitcoin Futures ETF (BTFD), launched just days after BITO, currently holds $ 71.9 million.

Related: State-owned Bitcoin Holdings Jumped in 2021

Although the VanEck Bitcoin Strategy ETF (XBTF) has increased its assets under management by $ 6 million since its launch on November 16, it currently only holds $ 15.8 million according to Dividend.com.

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