Ben Strack

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



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



BITO had <a href="https://blockworks.co/news/bito-on-track-to-be-first-fund-in-history-to-hit-1b-in-aum-in-two-days">quickly grown above $1 billion in assets</a> after launching in October 2021, reaching as high as $1.42 billion in assets the following month, according to YCharts.com.&nbsp;



But the fund’s assets had sunk to as low as about $500 million in November 2022 amid the <a href="https://blockworks.co/news/ftx-meltdown-timeline">collapse of crypto exchange FTX</a> — an event that spurred bitcoin price declines.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1694" height="710" src="https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=1024&amp;h=1024" alt="" class="wp-image-74641" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=1694 1694w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2023/11/BITO-AUM-CHART.jpg?w=80 80w" sizes="auto, (max-width: 1694px) 100vw, 1694px" /><figcaption class="wp-element-caption">BITO AUM chart (source: <a href="https://ycharts.com/companies/BITO/assets_under_management#:~:text=BITO%20Share%20Class%20Assets%20Under%20Management%3A%201.401B%20for%20Nov,22%2C%202023">YCharts</a>)</figcaption></figure>



Its assets under management stood at $850 million as recently as Oct. 12, the YCharts data <a href="https://ycharts.com/companies/BITO/assets_under_management#:~:text=BITO%20Share%20Class%20Assets%20Under%20Management%3A%201.401B%20for%20Nov,22%2C%202023">shows</a>. The fund has seen net inflows of $202 million since that date, according to ETF.com.&nbsp;



Other crypto investment products have seen inflows of late. These products brought in roughly $350 million last week, <a href="https://jbutterfill.medium.com/volume-159-digital-asset-fund-flows-weekly-report-0103828f4a3d">according</a> to CoinShares — the ninth consecutive week of positive flows.&nbsp;



Market appreciation has also contributed to BITO’s asset rise. Bitcoin’s (<a href="https://blockworks.co/price/btc">BTC</a>) 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.



Read more: <a href="https://blockworks.co/news/bitcoin-price-mirrors-2012-halving">Bitcoin flirts with breakout, price mirrors lead-up to 2012 halving</a>



<a href="https://blockworks.co/tag/proshares">ProShares</a> 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.”



<a href="https://blockworks.co/tag/bito">BITO’s</a> average daily trading volume of $160 million puts it in the top 5% of all US <a href="https://blockworks.co/tag/etfs">ETFs</a>, Hyman added.&nbsp;



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.&nbsp;



<a href="https://blockworks.co/news/sec-decision-date-bitcoin-etf#:~:text=Ark%20Invest%20and%2021Shares%20filed,11.">The SEC’s deadline to rule on such a proposal</a> 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.&nbsp;



Read more: <a href="https://blockworks.co/news/21shares-bitcoin-etf-approval-incoming">Bitcoin ETF saga reaches ‘pattern break’ as amendments pile up</a>



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.&nbsp;



“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.”&nbsp;



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.&nbsp;



Ark Invest and 21Shares 21Shares and Ark Invest <a href="https://blockworks.co/news/spot-crypto-etf-ark-invest-21shares">launched crypto futures ETFs</a> 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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BITO hits asset peak as possible spot bitcoin ETF approval looms

<div id="highlights-block_624ddb222f11e" class="highlights">
 <ul>
 <li>The ProShares Bitcoin Strategy ETF (BITO), which launched in October, has $1.3 billion in assets</li>
 <li>The SEC asked ETF issuer Direxion to withdraw its application for its proposed Bitcoin Strategy Bear ETF last year</li>
 </ul>
 
</div>



ProShares has revealed plans to bring to market an ETF that would offer investors the ability to bet against bitcoin following the launches of bitcoin futures and metaverse ETFs in recent months.



The ProShares Short Bitcoin Strategy ETF would seek investment results corresponding to the inverse — -1x — of the return of the CME Bitcoin Futures Contracts Index for a single day, according to <a href="https://www.sec.gov/Archives/edgar/data/1174610/000168386322002917/f11845d1.htm" target="_blank" rel="noreferrer noopener">a Tuesday disclosure</a>.



While the fund plans to invest primarily in bitcoin futures contracts, it may invest in money-market instruments, such as US Treasury bills and repurchase agreements.



ProShares is also seeking to launch a mutual fund with the same name and investment strategies, <a href="https://www.sec.gov/Archives/edgar/data/1039803/000168386322002921/f11846d1.htm" target="_blank" rel="noreferrer noopener">a separate disclosure</a> indicates. The filings do not indicate tickers or expense ratios for the proposed products.



A ProShares spokesperson declined to comment beyond the filings.



The firm in October launched its Bitcoin Strategy ETF (BITO), which was the country’s first ETF to invest primarily in bitcoin futures contracts. Priced at 95 basis points, BITO has slowly grown to $1.3 billion in assets after an initial jump to about $1 billion during its <a href="https://cms.blockworks.co/first-bitcoin-futures-etf-nears-1b-on-first-day-of-trading/" target="_blank" rel="noreferrer noopener">first day of trading</a>.



Shortly after BITO’s launch, ETF issuer Direxion <a href="https://cms.blockworks.co/proposed-direxion-etf-would-offer-short-exposure-to-bitcoin-futures/" target="_blank" rel="noreferrer noopener">filed to launch</a> a Bitcoin Strategy Bear ETF to offer managed short exposure to CME bitcoin futures contracts. The Securities and Exchange Commission <a href="https://cms.blockworks.co/sec-asks-direxion-to-withdraw-bitcoin-etf-application/" target="_blank" rel="noreferrer noopener">requested for the filing to be withdrawn</a>.



Nate Geraci, president of The ETF Store, told Blockworks he sees no reason why the SEC shouldn’t approve ProShares’ proposed fund, adding that he expects plenty of demand for the product.



“With the SEC having already blessed ETFs holding CME-traded bitcoin futures, why shouldn’t ETFs exist that short those same futures?” he said. “The current long-only bitcoin futures ETFs have also worked exactly as intended, which is likely to offer some additional comfortability to the SEC.”



Switzerland-based 21Shares launched its <a href="https://21shares.com/product/sbtc/" target="_blank" rel="noreferrer noopener">Short Bitcoin ETP</a> (SBTC) in January 2020. Horizons ETFs Management, headquartered in Canada, <a href="https://www.horizonsetfs.com/news/Press-Release/Horizons-ETFs-Launches-Long-and-Short-Bitcoin-Futu" target="_blank" rel="noreferrer noopener">launched the BetaPro Inverse Bitcoin ETF</a> (BITI) on the Toronto Stock Exchange in April 2021.



ProShares has 142 ETFs trading in the US with combined assets under management of roughly $70 billion, according to ETF.com data.



In addition to BITO, <a href="https://cms.blockworks.co/proshares-metaverse-etf-begins-trading/" target="_blank" rel="noreferrer noopener">the company launched</a> a Metaverse ETF last month. The ETF tracks an index comprising 40 companies, including device makers and data processors, as well as social media and gaming platforms.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.