ProShares Welcomes Spot Bitcoin ETF Competition

ProShares, a leading issuer of Bitcoin futures exchange-traded funds (ETFs), has viewed the arrival of spot Bitcoin ETFs in the U.S. as an overall positive development for its flagship Bitcoin Strategy ETF (BITO).

According to Simeon Hyman, global investment strategist at ProShares, the company is “pretty darn happy” with how BITO has performed commercially since competitors like the iShares Bitcoin Trust (IBIT) and Grayscale Bitcoin Trust (GBTC) launched. 

Hyman notes that BITO has continued to trade efficiently, maintaining an average discount of just 2 basis points from its net asset value. This compares favorably to a 36 basis point premium/discount on average for the new spot ETFs.

Trading volumes for BITO have remained strong post-spot ETF launch, in its very typical $300M-$600M daily range.

The initial volume spike around January 11, when BITO saw $2B in trading, has subsided. But interest remains healthy compared to pre-launch levels.

Operational Benefits

In addition to its potential commercial impact, Hyman believes the entrance of spot ETFs provides operational benefits to BITO and other futures products.

With more firms trading and custoding Bitcoin, the overall market infrastructure improves. This enhances the efficiency and liquidity of the futures market that BITO relies on.

As Hyman states, "the futures market is getting better, even better" thanks to new spot ETF activity bringing more participants into Bitcoin.

Trading Data

The data appears to confirm Hyman's perspective. BITO volumes have normalized after initial spot ETF hype, without declining.And BITO has maintained tight tracking to its net asset value, suggesting efficient futures arbitrage.

As the first major Bitcoin futures ETF from October 2021, BITO played a key role in kickstarting the crypto ETF trend. With $1.3B in assets under management, it remains an industry leader.

Spot ETFs Validate Crypto

Rather than dampen BITO's appeal, Hyman believes the arrival of high profile spot ETFs validates investor interest in crypto as an asset class.

Having more mainstream options like BlackRock’s IBIT exposes more investors to regulated Bitcoin access. This brings fresh assets into the ecosystem.

In Hyman’s view, spot ETFs make BITO stronger rather than cannibalizing its position. Their launch confirms Bitcoin’s maturity as a liquid asset class. 

Future Prospects

With crypto adoption accelerating, Hyman sees room for both futures and spot Bitcoin ETFs to succeed. By embracing the opportunities from spot ETFs, ProShares aims to solidify BITO's status.

Instead of competitors, the firm views spot products as validation of surging investment demand.Rather than dampen BITO’s appeal, the rising tide of adoption spot ETFs represent can help take futures products to the next level.