Interest around the futures-based Bitcoin ETF has been lackluster recently as BITO now holds less than 5000 CME contracts for the first time since November.
Futures-Based Bitcoin ETF Now Observes Diminishing Interest
As per the latest weekly report from Arcane Research, the futures-based BTC ETF, ProShares’ BITO, now holds less than 5000 CME contracts. This is the first time since November that the number has went below the 5k mark.
An “Exchange Traded Fund” (or ETF in short) is a type of investment product that allows the holder to bet on the price of a commodity without having to actually hold it.
The futures-based Bitcoin ETFs were approved back in October of last year, and they went live with a massive launch. ProShares’ BITO ETF reached $1 billion in AUM after being online for just two days, the fastest any ETF has hit the milestone.
If you are wondering why some would prefer to get Bitcoin exposure through such a fund, rather than just buying the coin, there could a few reasons for it.
One reason could be that some investors aren’t well-versed with the workings of the crypto world so they may not want to navigate around exchanges and wallets. While ETF is familiar territory for many traditional investors.
Another reason is that the futures-based ETFs provide the ability to speculate on the price of BTC in both directions. In spot trading, holders can only directly make profits when the price moves up.
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Now, here is a chart that shows the interest in the ProShares’ BITO ETF since it started trading:
The number of CME contracts held by the ProShares BITO ETF | Source: The Arcane Research Weekly Update - Week 1
As you can see in the above graph, the BITO ETF now holds less than 5000 CME contracts. This is the first time since November that the value of less than 5000 has been seen.
This may mean that the interest around BTC futures-based ETFs is now fading. A reason behind this could be the struggling price of the crypto over the past few months.
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Another may be the fact that these futures-based ETF instruments have high running costs. This isn’t the case with spot-based ETFs, but none such fund for BTC has been approved yet.
At the time of writing, Bitcoin’s price floats around $43k, down 7% in the last seven days. Over the past month, the crypto has dropped 13% in value.
The below chart shows the trend in the price of BTC over the last five days.
BTC's price seems to have gained some upwards momentum over the past day | Source: BTCUSD on TradingView
Featured image from Unspash.com, charts from TradingView.com, Arcane Research