Volatility Shares, LLC is committed to protecting your privacy. We use your registration information to customize and deliver additional resources via email, including company and fund news. To learn more about how we handle your personal information, read our Privacy Policy. If you don’t want to receive email from us, simply uncheck the box at the bottom of this form. Important Information About the FundPast performance is not necessarily indicative of future results. The chart below compares the performance of $1000 invested in Bitcoin vs BITX starting on September 17, 2014.
However, cryptocurrencies such as bitcoin are a very volatile investment class. No investor should ever risk more than they can afford to lose. If the SEC just recently gave approval to funds to operate as spot bitcoin ETFs, how is it that Grayscale Bitcoin Trust has been up and running since 2013? But not all of the new funds will draw in enough shareholder money.
Rating increased to a HOLD
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One way to inform our intuition is to simulate how this product would have performed in the past. Of course, there is no guarantee that BITX will behave similarly going forward. Bitwise is one of the lesser-known sponsors on this list, but its Bitwise Bitcoin ETF has some features that make it noteworthy. For starters, it’s listed on the New York Stock Exchange’s NYSE Arca platform, which means it is trading on a premier platform for exchange-traded funds. On Uphold’s WebsiteDon’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you shouldn’t expect protection if something goes wrong.
And as a result, shares often traded at a big premium or discount to the actual value of the underlying bitcoin. Investors are understandably reluctant to pay, say, $1 for 90 cents worth of assets. With SEC approval of its conversion to an ETF, GBTC got a level playing field with the other 10 ETFs that won the SEC’s okay to operate. First-movers are often more successful at attracting shareholders and their money in the long run. ProShares Bitcoin Strategy ETF launched in 2021 as the first bitcoin futures ETF, and it is still the leader in that category. It attracted around $1 billion in assets within a few days after its launch.
- The iShares Bitcoin Trust ETF is one of the emerging leaders after January’s regulatory moves, thanks to a surge of shareholder money inflow.
- Others offer indirect exposure to this popular digital asset through bitcoin futures.
- As always, keep in mind that past performance is no guarantee of future results.
- Funds that fail to maintain a sufficient amount of assets under management will find it hard to stay in business.
Simulating BITX’s performance from that point forward is straightforward. Specifically, BITX seeks to deliver 2X the daily percentage moves of S&P Global’s SPBTFDUE index. This index documents a process for rolling Bitcoin futures from sooner-to-expire futures to longer-to-expire futures. While this index provides guidance to Volatility Shares for managing BITX’s assets, Volatility Shares does not guarantee that BITX’s mix of futures or performance will exactly track the index. The fund’s official Net Asset Value (NAV) will ultimately be decided by the value of the assets it holds, not by SPBTFDUE’s value.
Volatility Shares 2x Bitcoin ETF (BITX)
- As has often been the case throughout cryptocurrency’s short history, many other cryptocurrencies—often called altcoins, due to them being alternative coins to bitcoin—have risen in value in lockstep with bitcoin’s bull run.
- One trend to watch for is that the new spot offerings have caused many shareholders to move some assets out of the older funds, into their newer cousins.
- However, history shows that many ETFs ultimately change to a different strategy or de-list altogether.
- For example, investing in a spot bitcoin ETF, as opposed to owning cryptocurrency outright, may seem more secure or approachable to investors.
- A contraction in use of bitcoin may result in increased volatility or a reduction in the price of bitcoin, which could adversely impact the value of the Fund.
- You should also consider if you’ll ever transfer any bitcoin from your exchange to a separate hot or cold crypto wallet.
Get Forbes Advisor’s expert insights on investing in a variety of financial instruments, from stocks and bonds to cryptocurrencies and more. Nobody knows what the future of bitcoin ETFs, which are volatile securities, will be. Since inception, bitcoin prices have soared to more than $60,000 per coin. But unlike mutual funds, ETFs are traded directly on a stock exchange like stock in a publicly traded company.
Volatility Shares LLC
That explains why the total net assets are tiny for ProShares Short Bitcoin ETF and why its performance has been abysmal. The expense ratio for this complex fund is pretty steep. Thanks to the friction of levered funds—that is, the combined direct and indirect costs of trading them—you are unlikely to ever get a performance that is exactly twice bitcoin’s performance. But with a gain of about 51% since its June 2023 inception date, it’s hard to argue there isn’t a use for this admittedly aggressive bitcoin ETF.
ProShares Bitcoin Strategy ETF (BITO)
The SEC is now considering approval for spot Ethereum ETFs, which would provide more investors access to Ethereum, the second-largest cryptocurrency by market capitalization. The approval of bitcoin ETFs has opened up the world of cryptocurrency investing to many investors who otherwise may not have had an appetite for it. For example, investing in a spot bitcoin ETF, as opposed to owning cryptocurrency outright, may seem more secure or approachable to investors. BITB also boasts a hefty level of assets under management thanks to a short-term fee waiver that made it free to trade until the fund hit $1 billion in AUM. However, even bitx anka the baseline, post-waiver fee of 0.20% is attractive, so many investors may leave cash in BITB.
Many people choose to invest for retirement in an individual retirement account, otherwise known as an IRA, or in a 401(k) plan. If a retirement investor would like to get a modest amount of exposure to bitcoin without opening an account at a crypto exchange or a bitcoin IRA, owning shares of a bitcoin ETF is a reasonable alternative. But ETFs that invest indirectly in bitcoin—such as ETFs that hold bitcoin futures—are not inferior. They are simply alternative strategies, looking to gain exposure to bitcoin in a different way. As a trust, GBTC traded something like a closed-end fund. That meant it lacked the highly liquid, smooth redemption mechanism that ETFs enjoy.
The value of an investment in the Fund could decline significantly and without warning, including to zero. You should be prepared to lose your entire investment within a single day. The Shares will change in value, and you could lose money by investing in the Fund. Every investment comes with risks, and cryptocurrencies such as bitcoin have proven to be extremely volatile. No investor should risk more than they can afford to lose.