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First bitcoin ETF loses record amount in its initial year

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A year after its record-breaking launch, the world’s first exchange-traded fund to track the price of Bitcoin has lost more investor dollars than any other ETF debut.

Asset manager ProShares to launch Bitcoin strategy fund in October 2021, soon most successful A new ETF in history, it raised over $1 billion in its first week of trading on the New York Stock Exchange.

Bitcoin enthusiasts proclaimed the launch as the moment the cryptocurrency entered and got caught up in the world’s largest stock market. mainstream investment Strategies for both retail and institutional buyers.

But in its first year of existence, the fund has suffered unprecedented losses, according to data from the Financial Times’ Morningstar Direct.

A 70% drop in stock prices also makes this the sixth worst-performing debut ETFs This is a test for investors during what has come to be known as “Crypto Winter.”

“Thus, we have seen funds plummet so quickly, but rarely have they attracted so many assets so soon after launch. [this] Jeffrey Ptak, Chief Rating Officer, Morningstar Research Service, said:

The ETF, known as BITO, has consistently attracted inflows throughout its life, but has seen only a few withdrawals. First year net inflows were his $1.8 billion, while current assets are his $624 million. Combined with the timing of the inflow and a 70% drop in the fund’s share price, Morningstar calculated that BITO lost his $1.2 billion in investor capital, making it the largest ever loss.

Other ETFs fell further in their first years, but they were all much smaller. Global X Blockchain ETF (BKCH) — another crypto-related fund — plummeted 76.7% by July in its first year of operation, but assets peaked at $125 million and are now at $6,000 I only have $10,000.

“BITO has followed Bitcoin closely since its launch and we believe this is what our shareholders want from the fund,” ProShares said in a statement.

Michael Sapir, CEO of ProShares, said at the launch of BITO that it was on par with the first US equity fund in 1993, the first bond fund in 2002 and the first gold fund in 2002. He said it was a milestone for the $8.4 trillion ETF industry. 2004. The long-awaited launch of BITO pushed the price of Bitcoin from his $63,000 on launch day to his all-time high of nearly $70,000.

But last November, it became clear that US interest rates began to rise, hurting speculative assets. The ETF has tracked a 69% decline in Bitcoin itself, but the cost of maintaining the futures contracts it relies on has also eaten into profits. are traded.

Earlier this year, Jeff Dorman, chief investment officer at asset manager Arca, said: . .totally lost the narrative — it’s not an inflation hedge, it’s not uncorrelated [to other assets] And it does not act defensively. “

Some investors remain loyal to the crypto cause. Todd Rosenbluth, head of research at consulting firm VettaFi, said buyers “remained very loyal to Bitcoin’s long-term theory.”

“The fund has not experienced the expected outflows from its performance,” Rosenbluth said. is whether the asset manager is confident to keep the product,” he said.

Additional reporting by Scott Cipollina

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