Last fall’s headlines were dominated last year by anticipation of the SEC’s approval of a Bitcoin futures ETF.
The excitement was palpable at the announcement. ProShares Bitcoin Strategy ETF (BITO)It was launched in October 2021 and gave investors in the United States access to bitcoin futures in an ETF structure.
BITO launched with $20 million in seed capital and raised $550 millions from investors within a matter of days. It became the fastest ETF to reach $1Billion in assets under administration.
According to Simeon Hyman (Global Investment Strategist at ProShares), there was clearly a demand for bitcoin exposure from investors interested in this emerging digital asset. However, they didn’t want to go through all the hoops of accessing them.
In order to be exposed to bitcoin, one needed a bitcoin wallet and keys in order to unlock a virtual vault.Investors can gain exposure through traditional brokerage accounts with BITO and the subsequent bitcoin futures exchange traded funds.
Since then, BITO continues to see inflows, even after the tumultuous first few days. Hyman reports that the fund has accumulated $403 million in additional assets as of January 21st.
These inflows, especially during such a turbulent time for bitcoin and broader markets suggests that demand is likely to remain strong across a wide range of financial conditions.
Futures are often associated by investors with leverage and short-term trades. BITO, however, is a comprehensive ETF that offers a unique way to invest in futures.
The fund’s ETF structure is well-suited for a buy and hold investor.
Hyman explained that BITOs futures position are fully collateralized. This means that BITO has sufficient cash to target futures exposure equal to the net asset level.
BITO also manages the rolling futures contracts to keep this exposure over time.
BITO’s strong trading volume, tight spreads and well-functioning options markets make it a good choice for short-term investors.
ProShares believes this fund offers opportunities both for short-term and long term investors.
BITO currently holds more than $1 billion in investor assets, and has an expense ratio of 95 base points.
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