ProShares, the issuer of the first U.S. bitcoin futures-linked exchange-traded fund (ETF), has dismissed concerns about tracking errors and associated trading costs with the derivatives. The ProShares Bitcoin Strategy Fund, which was launched on the New York Stock Exchange in October 2021, allows investors to gain exposure to bitcoin without owning the cryptocurrency directly. As the world’s largest crypto fund, the ETF invests in regulated and cash-settled bitcoin futures listed on the Chicago Mercantile Exchange (CME).
Since the inception of the ProShares Bitcoin Strategy Fund, there have been speculations that it and other futures-based ETFs would underperform bitcoin due to the costs involved in rolling over or selling expiring futures contracts and buying the next set. However, ProShares has refuted these concerns, asserting that the fund has closely tracked bitcoin’s price since its launch. Simeon Hyman, global investment strategist at ProShares, stated in an email interview with CoinDesk, “Concerns about the roll costs are misguided; BITO has closely tracked bitcoin’s price since inception.”
The ProShares Bitcoin Strategy Fund’s ability to mirror the price movement of bitcoin has alleviated fears among investors who are interested in gaining exposure to the cryptocurrency but are hesitant about directly owning it. By investing in regulated and cash-settled bitcoin futures, the ETF provides a more regulated and secure avenue for investors to participate in the bitcoin market. This approach offers investors the benefits of bitcoin’s potential price appreciation without the concerns of custody and security that come with owning the cryptocurrency.
In recent years, the demand for bitcoin and other digital assets has surged, with institutional investors and traditional financial institutions showing increased interest. With the launch of the ProShares Bitcoin Strategy Fund, more investors now have access to bitcoin through a well-established and regulated financial instrument. The ETF has opened doors for a wider range of market participants, enabling them to gain exposure to bitcoin through a familiar investment vehicle.
Despite the initial skepticism surrounding futures-based ETFs, the ProShares Bitcoin Strategy Fund has proven its ability to closely track the price of bitcoin. This observation not only provides assurance to investors but also establishes a strong precedent for future developments in the crypto market. The success of the ProShares Bitcoin Strategy Fund may pave the way for more innovative financial products that offer exposure to digital assets while addressing the concerns associated with custody and security.
As the popularity of cryptocurrencies continues to grow, the introduction of more ETFs and investment vehicles that provide access to these assets is expected. This expansion within the investment landscape can help bridge the gap between traditional finance and the digital asset space, further solidifying cryptocurrencies as a legitimate asset class. The ProShares Bitcoin Strategy Fund’s performance reinforces the credibility of bitcoin as an investment option and encourages more investors to explore the opportunities offered by the digital asset market.
In conclusion, the ProShares Bitcoin Strategy Fund has effectively addressed concerns about tracking errors and associated trading costs. The ETF’s ability to closely mirror the price of bitcoin has proven beneficial for investors seeking exposure to the cryptocurrency through a regulated and secure investment vehicle. With the success of the ProShares Bitcoin Strategy Fund, the stage is set for the development of additional financial products that provide access to digital assets while mitigating concerns related to custody and security. As cryptocurrencies gain further recognition as a legitimate asset class, the integration of these assets into traditional investment portfolios is likely to increase.