Outflow of BITO Funds at $270 Million: Is the Launch of Bitcoin Spot ETF Causing Crowding Out Effect?
The Bitcoin Strategy ETF, with the trading code BITO, is the first Bitcoin futures ETF in the US market. It began trading on the New York Stock Exchange in October 2021 and is issued by the fund management company ProShares, with a management fee of 0.95%. According to information on its website, it tracks the value of Bitcoin through investments in Bitcoin futures on the Chicago Mercantile Exchange (CME). We can see that approximately 50% of BITO is allocated to futures contracts expiring in January, and 40% is allocated to futures contracts expiring in February. This means that BITO needs to continuously roll over its positions (i.e., close out existing futures contracts before they expire and purchase new contracts for March or April) in order to maintain exposure to Bitcoin futures. Rolling over positions incurs transaction costs, and there can also be price differences across futures contracts with different expiration dates. Therefore, ETFs that track futures contracts typically have higher costs compared to simply buying and holding the underlying asset.
