As per the data compiled from Morningstar Direct for FT, the Bitcoin Strategy fund (BITO) launched in October 2021 by ProShares lost money on an “unprecedented scale.”
The ETF has attracted consistent inflows throughout the past year, with only two withdrawals. However, data suggested net inflows of $1.8 billion in its debut year, while its current assets were recorded at $624 million, meaning a 70% drop in the fund’s equity price.
Jeffrey Ptak, chief rating officer at Morningstar Research Services, stated,
“We’ve seen funds nosedive right out of the gate in this manner, but rarely do they attract so much in assets so soon after launching like [this] did.”
BITO was designed to track the price of Bitcoin and marked a crucial step in the history of the flagship crypto-asset. The fund is expected to have lost $1.2 billion of investors’ money, according to MorningStar’s calculation, thereby making it by far the biggest debut loser.
Biggest Debut Loser
BITO managed to attract more than $1 billion in assets in its first two days of trading. Its launch was heralded among the most successful in the history of the ETF industry. However, its debut is often considered ill-timed by many industry prognosticators.
Nate Geraci, president of an advisory firm, ‘The ETF Store,’ also echoed a similar sentiment on BITO, citing that the launch “nearly perfectly” coincided with Bitcoin topping out.
“BITO is one of the most ill-timed ETF launches in history, with its debut nearly perfectly coinciding with the price of spot Bitcoin topping out. The upside of that extremely poor timing is that the Bitcoin futures curve flattened out, minimizing the negative impact of rolling contracts every month.”
Geraci does not believe BITO’s performance gap with the spot BTC price could narrow down in the coming months. BITO is a bitcoin futures ETF. While the retail investors call for a spot ETF, the United States Securities and Exchange Commission is yet to pay heed to the matter.
Meanwhile, asset manager Grayscale is currently battling with the commission to bring the first exchange-traded spot bitcoin fund to the US market. The company has garnered widespread support from important industry players.