How ProShares bitcoin ETF went bust within months of stellar debut

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Cryptocurrencies are crumbling and the rout has sent investors in a bitcoin fund that had a stellar debut not long ago, looking for cover. The ProShares Bitcoin Strategy ETF (BITO) has shed over 35 percent in less than three months since its launch in October last year.The fund was, in fact, among the 10 worst performers in terms of returns over two months since its public listing, Bloomberg Intelligence data analysed by Athanasios Psarofagis showed at the end of last week.Worries over the rapid spread of the Omicron variant of COVID-19, higher inflation, and expectations of multiple interest rate hikes in the US this year have weighed down the crypto market. Bitcoin has lost over 40 percent from its all-time high of $69,000 scaled in November 2021 and it is down 10.5 percent since the start of 2022.Also Read | Torus Kling Blockchain to launch India’s first cryptocurrency, Ethereum ETFProShares Bitcoin ETF had garnered a record amount of $1 billion, within two days of launch making it among the most successful debuts ever.

It bagged the second spot on the turnover charts, just behind a fund with pre-seed investment backing. But the doom began as quickly.

The fund has not attracted a single penny in investments so far this year.The fund does not invest directly in bitcoin but is based on futures contracts. Due to regulatory concerns, direct holding of bitcoin by an ETF is not yet allowed.Since the establishment of the ProShares Bitcoin Strategy ETF, eight out of the top 10 cryptocurrencies by market cap have tanked.

Two have remained consistent only because they are stable coins pegged to the US dollar (Tether & USD Coin).The volume of Bitcoin being traded has also plummeted in the last year. A Messari compilation of