World’s First Bitcoin ETF Struggles, Recording 70% Loss

In Brief

• The first Bitcoin-based ETF has fallen tremendously since its record-breaking launch one year ago.
• Having fallen some 70% from its peak, the ETF has lost investors more money than any other ETF so far.
• Meanwhile, flows into cryptocurrency investment products have remained stagnant since the summertime.

The world’s firstBitcoinETF, launched amid great fanfare in the U.S. a year ago, has tanked dramatically – losing more money than any other ETF debut.

Upon its launch in late Oct last year, ProShare’s Bitcoin Strategy fund (BITO) quickly drew over $1 billion in subscriptions. This made it one of the most successful debuts ever for a new exchange-traded fund.

Now, one year later, the price of the ETF has dropped 70% from its peak, according to Morningstar Direct data. This has subsequently made it the sixth-worst performing ETF since its launch so far.

Bitcoin ETF Loses More Money Than Any Other

The fund drew significant attention prior to its U.S. launch, due to its approval by the Securities and Exchange Commission (SEC). Prior to BITO, the SEC had rejected every application for a Bitcoin-based ETF.

BITO managed to receive approval because it is based on Bitcoin futures rather than the cryptocurrency itself. Since they are based on futures, which are regulated, SEC Chair Gary Gensler said these products offer consumers more protection.

The novelty of an American Bitcoin ETF greatly contributed to unprecedented subscription numbers. Yet, the bigger they are, the harder they fall. Despite seeing consistent inflows totaling $1.8 billion over the past year, its current assets only stand at $624 million.

Morningstar Direct analysis indicates that this fund has lost more money for investors than any other ETF within a year. While other crypto ETFs have actually depreciated more, none had such a substantial initial capital investment.

Crypto Trading Volume Stagnates

Meanwhile, year-to-date net inflows into digital asset investment products, such as BITO, stands at $480 million, according to CoinShares data. Recent reports indicate that trading volumes surrounding these assets have stagnated since the summer. This past week was no exception, with volumes their lowest in two years at $758 million, compared to $7 billion a week one year prior.

The report highlighted that Bitcoin-based products saw inflows for the sixth straight week, albeit a mere $4.6 million. On the flip side, short-Bitcoin-based products saw outflows of $7.1 million, carrying the total net flows into the negative.

The report noted that these products were the only ones to have seen any consistent action recently. Short-Bitcoin-based products have now seen $15 million in outflows in Oct, some 10% of their total assets under management.