Pro Shares became famous last summer when it announced it would be unveiling the United States’ first bitcoin-based exchange-traded fund (ETF).
Pro Shares Has Gone from Hero to Zero
Many analysts and traders had mixed feelings about the product. On one hand, traders in the U.S. would now be gaining access to a product they had long wished for. Many people were hoping that a bitcoin-based ETF would come along soon, though there were those who doubted the product as it was based on futures technology – which was considered inferior to real, physical bitcoins – and it would thus be monitored and regulated under a 1940s law that they felt didn’t encompass the crypto space logically.
Those who have invested in the Pro Shares product initially began their investing journey with happy faces. Things really picked up not long after it was first introduced, and traders likely felt they were on top of the world and could never be brought back down.
However, at the time of writing, it appears the product isn’t doing so hot, and like bitcoin itself, it’s fallen by more than 70 percent since its initial debut in the summer of 2021.
The crypto space has been crashing and burning as of late. The arena has lost more than $2 trillion in overall value in just the last few months alone, while bitcoin – the world’s number one digital currency by market cap – has fallen from the all-time high of $68,000 per unit it was trading at in November of last year to about $19K at press time. It’s a sad and ugly sight.
James Seyffart – a Bloomberg Intelligence analyst – commented on the current state of the Pro Shares (aka BITO) ETF, stating:
It’s been a bad year. We’re looking at $1.2 billion burned, but if you just want exposure to bitcoin, BITO is the best option in the ETF landscape, at least in the U.S.
Gregory d’Incelli – co-founder of Scenius Capital Management – also threw his two cents into the mix, mentioning:
One could certainly argue that BITO has actually worked and performed as intended all while offering investors an SEC-approved wrapper with the convenience, liquidity, and transparency of an investable ETF.
Was the Project Ill-Timed?
Last to chime in was Nate Geraci, president of The ETF Store. He explained:
BITO is one of the most ill-timed ETF launches in history, with its debut nearly perfectly coinciding with the price of spot bitcoin topping out. The upside of that extremely poor timing is that the bitcoin futures curve flattened out, minimizing the negative impact of rolling contracts every month… The bottom line is that BITO still underperformed even during a brutal crypto winter… Expect the futures curve to steepen and the negative performance gap between BITO and spot bitcoin to widen. Meanwhile… still no spot bitcoin ETF.
