To considerable enthusiasm, a Bitcoin futures exchange-traded fund (ETF) launched on the New York Stock Exchange (NYSE) little more than a month before. The ProShares Bitcoin Strategy ETF (BITO) started trading on the NYSE with increased participation from Wall Street investors.
Nevertheless, after its dramatic start, the ETF has turned out to be a significant loss. According to Bloomberg Intelligence data analyzed by Athanasios Psarofagis, the ETF is currently one of the ten terrible performers with respect to returns two months after it became public, with a 30% decrease.
The ETF first started trading on October 19. Its stock was worth $40 at the time. It had topped $1 billion in trading volume by the conclusion of Day 1 of trading, giving it the second-best launch, trailing only a fund with pre-seed assets. However, according to a Bloomberg story, BITO is already down almost 9% in only one week.
As per the article, Bitcoin, the world’s biggest and oldest cryptocurrency, has lost over 34% of its valuation since the launch of BITO on October 19. The cryptocurrency reached a high of more than $68,000 per cryptocurrency in November and has since dropped dramatically.
In addition, the fund established a fresh record by raising $1 billion in assets in only two days. Psarofagis, on the other hand, thinks that the ETF’s present success will not inevitably have an influence on the crypto industry’s ongoing growth.
Insisting this point, SEC Chairman Gary Gensler stated that while some other ETFs had a difficult start, they may still increase assets. Instead of acquiring Bitcoins on a cryptocurrency exchange, the BITO ETF enables investors to buy them via a futures instrument.Put differently, instead of simply purchasing Bitcoin, investors will now be able to invest in a fund that follows Bitcoin futures.
Investors who participate in this innovative ETF fund are effectively wagering on the ETF’s shares growing in value over time. The fundamental driver of the price of this fund’s units is bitcoin.
