First Bitcoin ETF loses record sum in the first year

One year after his record-breaking introduction, the world's first stock market-traded fund, which reproduces the Bitcoin price, lost more investor dollars than any other ETF debut.

The asset manager Proshares put on his Bitcoin strategy fund in October 2021, which immediately became the most successful new ETF in history and brought in more than $ 1 billion in his first week of retail on the New York stock exchange.

Bitcoin enthusiasts proclaimed the start as the moment when crypto joined the world's largest stock market and caught up in mainstream investment strategies for private and institutional buyers.

But a year after its existence, the fund has lost money to the Financial Times, according to the data from Morningstar Direct.

his 70 percent share of stock price also makes him the most six-worn debut ETF of its kind of all times, in a test for investors during the so-called "crypto winter".

"We saw how funds plunged into the depths from the start, but rarely do they attract as much assets as this [this]," said Jeffrey Ptak, Chief Ratings Officer at Morningstar Research Services.

the ETF, known as Bito, has constantly attracted tributaries over the course of its existence, with only slight withdrawals. But even with net inflows of $ 1.8 billion in the first year, his assets are now to $ 624 million. If you take the timing of the inflows and the 70 percent decline in the stock price of the fund, Morningstar calculates that Bito has lost $ 1.2 billion in investor money, which makes it by far the greatest debut loser.

Other ETFs continued to fall in their first year, but they were all much smaller. The Global X Blockchain ETF (BKCH) - another crypto -related fund - crashed by 76.7 percent in its first year to July, but reached a maximum of $ 125 million in assets and now only lasts $ 60 million

Proshares said in a statement that "Bito Bitcoin has followed exactly since his laying on what our shareholders expect from the fund".

At the time of the introduction of Bito, Michael Sapir, Chief Executive from Proshares, said that this was a milestone for $ 8.4 trillion, comparable to the first US stock fund in 1993, the first pension fund in 2002 and the first gold fund. from Bitcoin of $ 63,000 on the day of the introduction to record heights of almost $ 70,000.

But in November last year it became clear that the US interest rates would start to drive up, which would affect speculative assets. The ETF has followed Bitcoin's 69 percent decline, while the costs for maintaining the futures contracts, which he rely on, also reduced its profits. The token has been traded at around $ 20,000 for four months.

At the beginning of this year, Jeff Dorman, Chief Investment Officer at the asset management company Arca, said that "Bitcoin.. Has lost his narrative completely - it is not an inflation protection, it is not incorrect [to other assets] and it does not act defensively".

Some investors remain true to the crypto matter. The buyers "remained extremely loyal to the long -term thesis for Bitcoin," said Todd Rosenbluth, research manager at the advisory company Vettafi, with net inflows of $ 87 million in Bito in the last six months despite the drop in prices.

"The fund did not record the drains that would be expected due to its performance," said Rosenbluth. "The pendulum has swung away from certain investment highs this year. Historically, it can break back in favor, but the challenge is whether the asset manager has the trust of keeping the product afloat," he said.

Additional reporting by Scott Chipolina