The anticipation for the approval by the SEC of a bitcoin futures ETF was the main focus of headlines last autumn.
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 was launched with only $20 million seed capital. It raised $550 million from investors in its first day and became the fastest ETF ever to reach $1 Billion in assets under management.
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.
To be exposed to bitcoin in the past, you needed a bitcoin wallet as well as keys to unlock a virtual vault.Investors could gain exposure through a traditional brokerage account with BITO (and subsequent bitcoin futures ETFs that came to market).
Since then, BITO continues to see inflows, even after those first few days. Hyman reports that the fund has accumulated $403 million in additional assets as of January 21st.
He said that these inflows, especially in the midst of turbulent times in bitcoin and other markets, suggest that demand for bitcoin exposure, and BITO in particular, is likely to continue strong in a variety of financial conditions.
Many investors associate futures and short-term trading with leverage. BITO is a comprehensive ETF with distinctive differences that allows it to be different from other futures-investing ETFs.
The fund’s ETF structure and active management characteristics make it a good choice for a buy-and hold investor.
Hyman explained that BITOs futures position are fully collateralized. This means that BITO can target futures exposure equal to its 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 both short and long-term opportunities.
BITO currently has more than $1B in investor assets and a 95 basis point expense ratio.
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