Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnWeb3SquareMore
Trade
Spot
Buy and sell crypto with ease
Margin
Amplify your capital and maximize fund efficiency
Onchain
Going Onchain, without going Onchain!
Convert & block trade
Convert crypto with one click and zero fees
Explore
Launchhub
Gain the edge early and start winning
Copy
Copy elite trader with one click
Bots
Simple, fast, and reliable AI trading bot
Trade
USDT-M Futures
Futures settled in USDT
USDC-M Futures
Futures settled in USDC
Coin-M Futures
Futures settled in cryptocurrencies
Explore
Futures guide
A beginner-to-advanced journey in futures trading
Futures promotions
Generous rewards await
Overview
A variety of products to grow your assets
Simple Earn
Deposit and withdraw anytime to earn flexible returns with zero risk
On-chain Earn
Earn profits daily without risking principal
Structured Earn
Robust financial innovation to navigate market swings
VIP and Wealth Management
Premium services for smart wealth management
Loans
Flexible borrowing with high fund security
ProShares Says Bitcoin ETF Has Matched BTC Price Closely, 'Roll Cost' Concerns Are Unwarranted

ProShares Says Bitcoin ETF Has Matched BTC Price Closely, 'Roll Cost' Concerns Are Unwarranted

CoindeskCoindesk2023/07/21 08:36
By:Omkar Godbole

Interest on the ETF's cash balances helps offset the cost of rolling from one set of futures to the next, ensuring a low performance discrepancy, the firm said.

New York Stock Exchange with banner flagging ProShares Bitcoin Strategy ETF on the day it started trading.

ProShares, the issuer of the (ETF), said concerns that costs associated with trading of the derivatives would lead to tracking errors are unfounded and the product has closely mimicked bitcoin's spot-price performance since day one.

The ProShares Bitcoin Strategy Fund began trading under the ticker BITO on the New York Stock Exchange in October, 2021, allowing investors to gain exposure to bitcoin (BTC) without having to own the cryptocurrency. The ETF, the world's largest crypto fund, invests in regulated and cash-settled bitcoin futures listed on the Chicago Mercantile Exchange (CME).

, observers speculated BITO and other futures-based ETFs would significantly underperform bitcoin due to costs associated with rolling over, or selling expiring futures contracts and buying the next set. Usually, longer-dated futures contracts trade at a premium to those closer to expiry, a condition known as contango. The contango tends to steepen during bull runs, and the steeper the contango, the higher the costs, and the so-called contango bleed.

"Concerns about the roll costs are misguided; BITO has closely tracked bitcoin's price since inception," Simeon Hyman, global investment strategist at ProShares, told CoinDesk in an email interview. "Since its inception (through 7/18), BITO has returned -54.5% compared to -51.5% for bitcoin. And over half of that modest difference is BITO's fee of 95bps per annum."

Bitcoin's recent rally and the resulting widening of contango at the end of June have and strengthened calls for spot-based ETFs, which invest directly in bitcoin and eliminate the need to roll over positions. Since June 15, a number of traditional finance giants like BlackRock, Invesco and others have (SEC) for spot-based bitcoin ETFs.

According to Hyman, BITO continues to closely track the spo t price as the fund's interest income from cash holdings compensates for the roll costs, which are closely tied to the level of interest rates in the U.S. economy.

"For a financial future with no storage costs, as is the case with the CME bitcoin futures, the futures contract premium should be in the ballpark of the term-equivalent interest rate. The Fed's raising of the benchmark interest rate by 500 basis points since March 2022 has been a key driver of those premiums, and consequently the roll costs of a bitcoin futures strategy," Hyman said.

"Here's the key piece of the puzzle. BITO earns interest on its cash balances which are driven by those same term-equivalent interest rates, which offset the roll costs. The result is close tracking to the price movements of spot bitcoin," Hyman added.

As Hyman says, one component of futures prices is interest rates, and the U.S. Federal Reserve has lifted its target range to 5%-5.25% to control inflation. Other variables include the price of the underlying asset, storage costs and convenience yield. The CME bitcoin futures are cash-settled, so there also no storage costs.

BITO earns interest from its cash holdings. The interest income is paid out in monthly dividends and covers the roll decay in the fund. BITO has paid dividends this year.

As of July 20, ProShares held Treasury bills, along with other assets and CME futures contracts expiring on July 28 and Aug 25. (ProShares)

When asked if potential spot ETFs would drive investors away fro m futures-based products, Hyman said it's tough to speculate on products that don't exist.

"BITO’s track record of performance and flows are a testament to the effectiveness of a bitcoin futures strategy within an ETF and investor interest," Hyman noted.

As of July 18, the ProShares ETF had $1.1 billion in assets under management. It has seen year-to-date inflows of $336.2 million. Since its inception, the fund has amassed $2.2 billion in investor money.

The market expects a potential launch of spot-based ETFs to unlock floodgates for institutional money.

Edited by Sheldon Reback.

173

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Earn new token airdrops
Lock your assets and earn 10%+ APR
Lock now!

You may also like

VIPBitget VIP Weekly Research Insights

As the crypto market recovers in 2025, Digital Asset Treasury (DAT) firms and protocol token buybacks are drawing increasing attention. DAT refers to public companies accumulating crypto assets as part of their treasury. This model enhances shareholder returns through yield and price appreciation, while avoiding the direct risks of holding crypto. Similar to an ETF but more active, DAT structures can generate additional income via staking or lending, driving NAV growth. Protocol token buybacks, such as those seen with HYPE, LINK, and ENA, use protocol revenues to automatically repurchase and burn tokens. This reduces circulating supply and creates a deflationary effect. Key drivers for upside include institutional capital inflows and potential Fed rate cuts, which would stimulate risk assets. Combined with buyback mechanisms that reinforce value capture, these assets are well-positioned to lead in the next market rebound.

Bitget2025/09/12 06:52
Bitget VIP Weekly Research Insights