ProShares Bitcoin Strategy ETF Sees Record AUM
The ProShares Bitcoin Strategy ETF (BITO) has reached a new all-time high for assets under management (AUM) as Bitcoin (BTC) surged past $38,000 in November. The fund’s Bitcoin futures contracts now have a value of $1.47 billion, up from $1.1 billion at the start of the month and $544 million at the beginning of the year. BITO has experienced strong inflows, with $470.9 million in net flows year-to-date and an average daily trading volume of $160 million, putting it in the top 5% of all U.S. ETFs.
BITO’s Performance and Competition with Spot ETFs
BITO has had one of its best-performing months since its inception in October 2021, coinciding with its previous all-time high AUM at $1.44 billion. Interestingly, both BITO and BTC have seen significant growth due to anticipation for a U.S. Bitcoin spot ETF, which could be a competitor to BITO. Bloomberg ETF analysts expect multiple ETF approvals from companies like BlackRock, Ark, and Fidelity in early January.
Advantages of BITO Over Spot-based Funds
Despite potential competition from spot-based funds, Simeon Hyman, Global Investment Strategist at ProShares, believes that BITO will “co-exist nicely” alongside them. He highlights the regulated nature of the futures market and the level of security provided by margin requirements and clearing houses. Additionally, Hyman points out that information is translated into price faster in the Bitcoin futures market compared to the spot market.
The Market Impact of a Bitcoin Spot ETF
Hyman does not believe that the approval of a Bitcoin spot ETF will have as powerful an impact as investors recognizing the role of crypto in their investment portfolios. He suggests that adding a volatile asset class like Bitcoin to a traditional portfolio can enhance portfolio efficiency. Hyman expects more people to see this as a use case for crypto.
Hot Take: Potential Impact of Spot ETF Approval
The approval of a Bitcoin spot ETF could have implications for competing BTC-adjacent companies, such as futures ETFs and publicly listed miners. However, BITO’s regulated nature and its advantages in the futures market may allow it to coexist with spot-based funds. Ultimately, the market impact of a spot ETF approval may not be as significant as the broader recognition of crypto’s role in investment portfolios.
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