ProShares Bitcoin ETF posts a record annual loss for the ETF industry

In the year since its launch, the United States’ first Bitcoin-ETF futures ETF from ProShares has lost $1.2 billion of investors’ money. This marked the worst debut for the ETF industry in its history, according to FT.

Trading of ProShares Bitcoin Strategy (BITO) started on the New York Stock Exchange on October 19, 2021. In the first 20 minutes, trading volume of the shares topped $280 million. Bloomberg analyst Eric Balchunas noted that the product entered the top 15 ETFs by most active starts in its first session.

Commenting on the BITO launch, ProShares CEO Michael Sapir called the event a milestone for the ETF industry, with assets totaling $8.4 trillion.

In the first week, investors poured more than $1 billion into the company’s Bitcoin fund, the strongest result for an ETF.

Over the year, net inflows into BITO amounted to $1.8 billion, while its assets are now valued at $624 million. Given a 70% drop in the stock price over this period, Morningstar Research Services analysts calculated that investor losses amounted to $1.2 billion.

«We have seen funds tumble soon after launch, but few of them attracted as much capital as in this case,» said Jeffrey Ptak, Director of Ratings at Morningstar.

ProShares said the bitcoin-tracking BITO provides investors with what they expect from the fund.

Bitcoin’s price has fallen about 69% over the year, and BITO’s losses were compounded by futures roll costs, FT noted.

Nevertheless, a number of investors remain bullish on digital gold — in the last six months net inflows into ProShares’ Bitcoin ETF totaled $87 million.

«The fund did not see the outflows one might have expected given its results. This year the pendulum has swung away from some investment theses. Historically this could turn to its advantage, but the problem is whether the asset manager has enough conviction to keep the product afloat,» said Todd Rosenbluth, Head of Research at VettaFi.

Back in October, Valkyrie Investments announced the liquidation of an ETF based on the stocks of firms that invested in bitcoin.

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