The ProShares Bitcoin Strategy ETF (BITO) – the first bitcoin (BTC) ETF to launch in the United States – has topped a new record for assets under management (AUM) this week, now boasting nearly $1.5 billion in Bitcoin futures contracts.
The record signals eagerness among institutions to gain exposure to BTC before approval of a widely expected bitcoin spot ETF by January.
Bitcoin Funds Soak In Capital
BITO logged its previous record of $1.44 billion on November 10, 2021 – roughly three weeks after its initial launch, and the same day that BTC tapped an all-time high of $69,000.
The new record, set on Tuesday, brought that figure up to $1.47 billion, and coincided with BTC tapping a new yearly high of $38,300.
The fund has performed exceedingly well across the month, rising from $1.1 billion in AUM to $1.42 billion within the first ten days of November alone. While much of that appreciation was due to the rising price of BTC itself, Bloomberg ETF analyst Eric Balchunas said at the time that roughly $240 million in growth since early October was due to new, concrete inflows.
Since inception, BITO’s average daily trading volume is $160 million, placing it within the top 5% of all U.S. ETFs.
Bitcoin investment funds globally have attracted substantial capital over the past month, rising to $32 billion in total AUM. Aside from ProShares, investment products from Purpose Investments – owner of the world’s first bitcoin spot ETF in Canada – soaked in $246 million this month.
Spot VS Futures ETFs
Unlike the ProShares ETF, a bitcoin spot ETF backs its shares with actual BTC held by the fund, rather than BTC futures contracts. This allows shares in the fund to track bitcoin’s price more accurately than a futures-based equivalent.
Shares in BITO, for example, are up only 79.94% year to date, whereas shares in the Purpose Bitcoin CAD ETF (BTCC.B) are up 122%. Meanwhile, BTC itself is up 127%.
U.S. regulators have refused to approve a bitcoin spot ETF so far, but recent developments have the market expecting one to arrive within the next two months.
For example, numerous applicants like BlackRock and Grayscale are in active conversations with the Securities and Exchange Commission (SEC) on how to prepare their ETFs for the market.
Experts say a bitcoin spot ETF will invite institutional capital into BTC that was previously inaccessible to 1:1 investment in the asset. Until now, many interested portfolio managers have been forced to settle for near-equivalents like BITO, Coinbase (COIN), and MicroStrategy (MSTR).
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