Industry Updates

ProShares bitcoin ETF enters as second-most traded ETF in history

BITO booked almost $1bn in trading volume on its first day

Jamie Gordon

a close-up of several coins

Early flows into ProShares’ bitcoin futures ETF illustrate just how much demand had built up for the arrival of the first ’40-Act’ wrapped crypto product.

Following approval by the Securities and Exchange Commission (SEC) last Friday, the ProShares Bitcoin Strategy ETF (BITO) launched on 19 October to become the second-most traded fund on record, according to data from Bloomberg.

By the end of its first day of trading on the New York Stock Exchange (NYSE), BITO had amassed $570m in assets under management (AUM), which included $20m seed money. The product also saw nearly $1bn traded by market close.

With more than 24 million BITO shares changing hands on Tuesday alone, the ETF has already broken into the top 30% of ETFs in terms of AUM, though settlements mean net flows in and out will not be known until overnight on Wednesday, Bloomberg said.

Ben Johnson, director of ETF Research at Morningstar, noted the strategy’s end-of-day assets imply it owns 1,770 futures contracts.

Conveniently, the Chicago Mercantile Exchange (CME) Group, the world’s largest financial derivatives exchange, announced on 30 September it would increase its spot month position limit for bitcoin futures, options and micro futures contracts from 2,000 to 4,000 in November, alleviating potential capacity constraints for BITO.

The strategy’s arrival will likely mean retail fans of the ETF structure in the US will be commencing their first wrapped crypto positions.

Unfortunately, with BITO being primarily futures-based, roll costs could impact returns by between 5-10% a year, estimated Matthew Hougan, CIO at Bitwise Invest, another firm that has filed an application for a spot bitcoin ETF in the US.

Expected to arrive with the same 0.95% total expense ratio (TER) as ProShares’ product, the Valkyrie Bitcoin Strategy ETF (BTFD), is awaiting clearance to list on the Nasdaq as soon as this week. 

In a statement on Monday, Invesco said it will halt efforts to launch a bitcoin futures ETF in the "immediate near-term" and instead focus on launching a physically-backed strategy with partner, Galaxy Digital.

Elsewhere, Grayscale, the company responsible for the popular $39.8bn Grayscale Bitcoin Trust (GBTC), has filed to convert its fund into ETF format.

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