BITO hits asset peak as possible spot bitcoin ETF approval looms

The first and largest bitcoin futures ETF is the biggest it’s ever been.

The ProShares Bitcoin Strategy ETF (BITO) reached $1.47 billion assets under management on Tuesday — its highest mark ever.

BITO had quickly grown above $1 billion in assets after launching in October 2021, reaching as high as $1.42 billion in assets the following month, according to YCharts.com.

But the fund’s assets had sunk to as low as about $500 million in November 2022 amid the collapse of crypto exchange FTX — an event that spurred bitcoin price declines.

BITO AUM chart (source: YCharts)

Its assets under management stood at $850 million as recently as Oct. 12, the YCharts data shows. The fund has seen net inflows of $202 million since that date, according to ETF.com.

Other crypto investment products have seen inflows of late. These products brought in roughly $350 million last week, according to CoinShares — the ninth consecutive week of positive flows.

Market appreciation has also contributed to BITO’s asset rise. Bitcoin’s (BTC) price was about $37,750 at 11:30 am ET on Wednesday — up about 130% from a year ago, and roughly 9% in the last 30 days.

ProShares investment strategist Simeon Hyman said in a statement that BITO’s asset peak “speaks to the demand for a familiar, accessible and regulated way to target the returns of bitcoin.”

BITO’s average daily trading volume of $160 million puts it in the top 5% of all US ETFs, Hyman added.

But the fund could soon have more competition, as many industry watchers expect the US Securities and Exchange Commission to soon approve ETFs that would hold bitcoin directly — marking a first for the regulator.

The SEC’s deadline to rule on such a proposal by Ark Invest and 21Shares is Jan. 10, at which time various segment observers believe the SEC could also greenlight spot bitcoin ETFs from BlackRock, Fidelity, Invesco and others.

Bloomberg Intelligence analyst Eric Balchunas said during a Nov. 20 segment on Bloomberg TV that BITO’s increase in assets is a bit ironic considering its potential fate.

“This is the ETF that’s probably going to be sort of under pressure, or seeing some exodus, once the spot ETFs come out, because people prefer those,” he said. “But until then, it’s being used in anticipation of those ETFs.”

21Shares president Ophelia Snyder said during a Bloomberg TV interview last week that while she believes spot bitcoin ETFs have “broader appeal,” she doesn’t expect them to make futures-based products obsolete.

Ark Invest and 21Shares 21Shares and Ark Invest launched crypto futures ETFs earlier this month.

“I think there’s still a role for futures products to play in this market,” Snyder said. “I think that is a smaller role than what spot will play.”

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