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Saturday, August 13, 2022

Bitcoin Futures ETFs See Decline In Interest

The ProShares Bitcoin Strategy Exchange Traded Fund (BITO) has witnessed a great launch. However, interest has drastically waned since then. Now, its CME contracts amount has continued being the lowest since November of last year.

The Reason Behind The Lack Of Interest In Bitcoin Futures

CME stands for Chicago Mercantile Exchange. The ETF of Bitcoin futures has 4,904 CME futures contracts in total. This data is as per the latest update by the fund given on January 11th. An ETF of Bitcoin futures lets investors speculate about Bitcoin’s (BTC) future price even if they do not hold any of the assets personally.

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The AUM (assets under management) of BITO has shrunk to $1.16Bn since hitting the $1.4Bn high during the previous November. This is similar to the amount that BITO held only 2 days following its launch on October 18th. Back then, in AUM, it was the fund that was fastest to reach $1BN.

BTC’s poor performance in price during the previous two months ranks among the top explanations of the slump in interest. Bitcoin continues to drift further and further from the $69k high mark that it hit on November 10th. Currently, it sits at about $43.7k.

An additional reason can be the higher than the usual cost of operating an ETF that is based on futures of any kind, not just Bitcoin. The monthly required rolling costs have to keep in front of the present price of BTC. This drives up the costs.

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Arcane Research speculates that a BTC ETF based on spots would not have the same issues with high fees growing over time. The SEC is set to rule on one such ETF filed by Fidelity Investments before January 20th. Other ETFs based on BTC futures have seen a similar lack of growth in their AUMs.

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