First Bitcoin ETF Loses Record Amount In Its Initial Year

One year after its record-breaking launch, the world’s first exchange traded fund tracking the price of bitcoin has lost more of investors’ dollars than any other ETF debut. The Financial Times reports: Asset manager ProShares launched its Bitcoin Strategy fund in October 2021, and it immediately became the most successful new ETF in history, amassing more than $1bn in its first week of trading on the New York Stock Exchange. Bitcoin enthusiasts proclaimed the launch as the moment when crypto joined the world’s biggest equities market and became enmeshed in mainstream investment strategies for retail and institutional buyers alike. But one year into its existence, the fund has lost money on an unprecedented scale, according to data from Morningstar Direct for the Financial Times.

Its 70 percent share price drop also makes this the sixth-worst performing debut ETF of its kind of all time, in a test for investors during what has become known as the “crypto winter.” The ETF, known as BITO, has attracted inflows consistently through its life, with only light withdrawals. But even with net inflows of $1.8 billion in its debut year, its assets now stand at $624 million. Taking together the timing of inflows and the 70 per cent drop in the fund’s equity price, Morningstar calculates that BITO has lost $1.2 billion of investors’ money, making this by far the biggest debut loser. Buyers “remained extremely loyal to the long-term thesis for bitcoin,” said Todd Rosenbluth, head of research at consultancy VettaFi.

“The fund has not seen the outflows one would expect given its performance. The pendulum has swung away from certain investment theses this year. Historically it can swing back in favor, but the challenge is whether the asset manager has the confidence to keep the product afloat.”