- The ProShares Bitcoin Strategy ETF is seeing inflows.
- Its inflows have risen in the past five weeks straight.
- Inflows jumped even after the launch of spot Bitcoin ETFs
The ProShares Bitcoin Strategy ETF (BITO) is still seeing inflows even after the Securities and Exchange Commission (SEC) approved 11 spot Bitcoin ETFs. This is ironic since most analysts were expecting the ETF to bleed cash as investors moved to other cheaper spot ETFs.
The most recent data by ETF.com shows that BITO has had inflows in the past five straight weeks. It is in its third consecutive month of gains. In January, it added over $240 million in assets after adding $29.7 million in December and $276 million in November.
In all, BITO ETF now has over $1.8 billion in assets, making it one of the biggest Bitcoin-focused ETFs in the market. The biggest one is the Grayscale Bitcoin Trust (GBTC), which has over $28 billion in assets.
Grayscale had a first-mover advantage in the ETF industry since it already had assets in its trust. Recently, however, the fund will likely come under pressure as investors move from lower-cost alternatives. According to Grayscale’s website, it has an expense ratio of 1.50%, much higher than the others. On Monday, the FTX Estate sold over $1 billion of GBTC, probably, moving it to other funds.
There is also a likelihood that BITO will also see outflows in the coming months. For a long time, BITO was one of the most direct ways for institutional investors to gain access to the Bitcoin market. The other option was to either buy and store Bitcoins or invest in GBTC.
The challenge with BITO is that its fees are substantially higher than other funds. BITO has an expense ratio of 0.95%. In this case, if you have $100,000 and Bitcoin remains steady, you will have to pay a $950 fee. In ten years, that will be $9,500, excluding compounding.
In contrast, investing in ETFs by Ark Invest and Bitwise will cost you nothing for the first six months while Blackrock’s IBIT has a 0.30% fee. In this case, a similar amount invested in iShares will cost $300 in the first year, giving a spread of $650. In the long-term, BITO and other Bitcoin ETFs will likely move in the same direction.
Therefore, some analysts believe thar BITO will need to cut fees in the future to compete with these other spot ETFs.
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