After a successful launch, interest in the ProShares Bitcoin Strategy Exchange Traded Fund has waned. It now has the lowest number of CME contracts since Nov. 20,21.
According to the latest update of the fund, Jan. 11, the Bitcoin futures exchange traded funds (ETF) hold a total 4,904 Chicago Mercantile Exchange futures contracts. An ETF that trades Bitcoin futures allows investors to speculate about the future price Bitcoin (BTC).
BITO’s assets under Management (AUM) has retraced its growth to $1.16 Billion from a peak of $1.4 Billion last Nov. It holds about the same amount as it did two days ago, when it reached $1 billion in AUM.
In its Weekly Update, Arcane Research addressed possible causes of the BITO retrace. The main reason for Bitcoin’s decline from $69,000 on Nov. 10, to $43,700 today is, as you might guess, its poor price performance over the past two-months.
Arcane suggests that another reason for declining interest in BITO could be the high cost of operating a futures-based ETF. With rolling costs each month to keep ahead of the current BTC prices, this can drive up costs.
“BITO sells its front month exposure to purchase the next-month contract every time the contract nears expiry.”
Arcane believes that spot-based BTC ETFs would not have to pay the same fees as those that grow over time. Although such ETFs have not been approved by the SEC, Fidelity Investments has been scheduled to rule on their filing by January 20.
Other BTC futures ETFs also have failed to increase their AUMs significantly, which is a fraction of BITO’s assets. Valkyrie’s Bitcoin futures ETF, BTFD (launched just days after BITO), currently has $71.9 million.
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According to Dividend.com, the VanEck Bitcoin Strategy (XBTF), although it has seen its AUM increase by $6 million since Nov. 16, its current holdings are only $15.8 million.