ProShares Bitcoin ETF Trading Volume Plummets 75% As Investors Turn To Spot BTC ETFs

Updated: 22 January 2024

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The ProShares Bitcoin Strategy ETF (BITO), the world’s largest BTC futures-based ETF, is seeing trading volume shrink as investors turn to spot Bitcoin ETFs (exchange-traded funds) launched on Jan. 11.

BITO saw shares worth slightly more than $500 million change hands on the NYSE on Jan. 18, down 75% from the record $2 billion registered on Jan. 11, according to data from Coinbase.

Data from ETF.com also revealed that BITO witnessed a net outflow of over $270 million during the same period.

Spot Bitcoin ETF Trading Kicks Off In The U.S.

Eleven spot Bitcoin ETFs recorded a cumulative trading volume of $14 billion in the first week after launch, which is an amount greater than that of all other ETFs launched in 2023. Overall these funds collectively amassed over $1.2 billion in investor money in the first week of trading.

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The approval of spot Bitcoin ETFs in the U.S. is a watershed moment for the crypto space as it helps bring Bitcoin to mainstream investors. Through these funds, institutional investors are able to gain exposure to the leading cryptocurrency without the hassle of having to safely store the crypto.

Spot Bitcoin ETFs also give investors a better alternative to futures-based ETFs such as BITO, due to the fact that BITO invests in CME BTC futures. As a result, it must roll over existing investment contracts into new ones, incurring “roll costs” that have a negative impact on the fund’s long-term performance.

Futures-Based ETFs Still Offer A Great Hedge

Despite the substantial decline in BITO’s trading volume, industry observers are still confident that ProShares’ Bitcoin Strategy ETF will play an integral role in the market as a hedging instrument.

“It is not unusual for an AP (authorized participant) to revert to regulated products such as BITO to hedge their positions (called deltas) as they may not have accounts with CME futures to do so,” Laurent Kssis, a crypto trading adviser at CEC Capital and a former ETF market maker, told CoinDesk. “This is generally considered a good proxy if they can’t execute CME Bitcoin futures or even outright Bitcoin.”