Bitcoin ETF Fever Returns: ProShares’ BITO Witnesses the Biggest Inflow in a Year

Nimra June 26, 2023
Updated 2023/06/26 at 5:04 PM
Bitcoin ETF Fever Returns ProShares BITO Witnesses the Biggest Inflow in a Year

The cryptocurrency market is once again abuzz with excitement as ProShares’ BITO Bitcoin ETF experiences a significant surge in inflows. Institutional investors appear to have regained their confidence in Bitcoin futures, leading to renewed interest in exchange-traded funds (ETFs) focused on the popular digital currency.

On June 26, Bloomberg’s senior ETF analyst, Eric Balchunas, reported a substantial influx of funds into the ProShares Bitcoin Strategy ETF (BITO), a fund that primarily deals with Bitcoin futures. This surge in inflows marked the largest weekly increase in a year, with a staggering $65.3 million pouring into the fund. With total assets surpassing $1 billion, BITO has solidified its position as one of the most sought-after BTC-linked ETFs among institutional investors.

According to Balchunas, BITO has demonstrated a close correlation to Bitcoin’s price movements, trailing spot prices by a mere 1.05% annually. The fund also boasts a competitive fee of 0.95%. ProShares reports that BITO has achieved an impressive 59.6% gain since the beginning of 2023. This surge in interest can be attributed to the recent filing by BlackRock, a global investment management company, for its own Bitcoin ETF on June 15. Since then, Bitcoin derivatives have gained significant traction, as evident from the surge in Bitcoin futures open interest (OI) on the Deribit crypto options exchange. As of June 25, OI stands at $319 million, representing a remarkable 30% increase from the previous week.

OI serves as a measure of the total number of outstanding futures contracts awaiting settlement. With the resurgence of ETF trading and the resulting price pump in Bitcoin, Grayscale, the world’s largest crypto asset manager, has also witnessed positive developments. The Grayscale Bitcoin Trust (GBTC), which has long traded at a substantial discount compared to spot BTC prices, is finally closing the gap.

Grayscale Premium Improves to -31.2%, SEC Approval of Bitcoin ETF Remains Uncertain as Competition Heats Up

According to Coinglass, the Grayscale premium, or discount, currently stands at -31.2%, a significant improvement from the December low of -49%. However, it remains uncertain whether the Securities and Exchange Commission (SEC) will approve a spot Bitcoin ETF. Nonetheless, numerous filings have followed in the wake of BlackRock’s application, intensifying the competition among ETF providers.

WisdomTree recently filed with the SEC for a spot Bitcoin ETF for the third time, closely followed by Invesco, which renewed its application for a similar product. Additionally, ETF Store President Nate Geraci identified several other issuers that he believes will file or refile for a spot Bitcoin ETF based on their previous filings. Geraci mentioned First Trust, VanEck, Global X, Fidelity, and Schwab, dubbing the latter as the “dark horse.”

As the Bitcoin ETF fever grips the market once again, all eyes are on the regulatory developments surrounding these investment vehicles, which hold the potential to shape the future of cryptocurrency trading and investment.

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