First Bitcoin ETF Loses Record Amount In Its Initial Year (ft.com) 37
One year after its record-breaking launch, the world's first exchange traded fund tracking the price of bitcoin has lost more of investors' dollars than any other ETF debut. The Financial Times reports: Asset manager ProShares launched its Bitcoin Strategy fund in October 2021, and it immediately became the most successful new ETF in history, amassing more than $1bn in its first week of trading on the New York Stock Exchange. Bitcoin enthusiasts proclaimed the launch as the moment when crypto joined the world's biggest equities market and became enmeshed in mainstream investment strategies for retail and institutional buyers alike. But one year into its existence, the fund has lost money on an unprecedented scale, according to data from Morningstar Direct for the Financial Times.
Its 70 percent share price drop also makes this the sixth-worst performing debut ETF of its kind of all time, in a test for investors during what has become known as the "crypto winter." The ETF, known as BITO, has attracted inflows consistently through its life, with only light withdrawals. But even with net inflows of $1.8 billion in its debut year, its assets now stand at $624 million. Taking together the timing of inflows and the 70 per cent drop in the fund's equity price, Morningstar calculates that BITO has lost $1.2 billion of investors' money, making this by far the biggest debut loser. Buyers "remained extremely loyal to the long-term thesis for bitcoin," said Todd Rosenbluth, head of research at consultancy VettaFi.
"The fund has not seen the outflows one would expect given its performance. The pendulum has swung away from certain investment theses this year. Historically it can swing back in favor, but the challenge is whether the asset manager has the confidence to keep the product afloat."
Its 70 percent share price drop also makes this the sixth-worst performing debut ETF of its kind of all time, in a test for investors during what has become known as the "crypto winter." The ETF, known as BITO, has attracted inflows consistently through its life, with only light withdrawals. But even with net inflows of $1.8 billion in its debut year, its assets now stand at $624 million. Taking together the timing of inflows and the 70 per cent drop in the fund's equity price, Morningstar calculates that BITO has lost $1.2 billion of investors' money, making this by far the biggest debut loser. Buyers "remained extremely loyal to the long-term thesis for bitcoin," said Todd Rosenbluth, head of research at consultancy VettaFi.
"The fund has not seen the outflows one would expect given its performance. The pendulum has swung away from certain investment theses this year. Historically it can swing back in favor, but the challenge is whether the asset manager has the confidence to keep the product afloat."
Bitcoin crashed so hard so fast (Score:2)
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Highly speculative investment vehicle (Score:5, Interesting)
Shocking
I'm old enough to remember people losing big chunks of their life savings in the gold crash of the 1970s. It'll only go up, they said....
Re:Highly speculative investment vehicle (Score:4, Insightful)
Problem with gold, silver, and precious metals, as well as cryptocurrencies is that they give nothing back while one holds them. If I hold some blue-chip stocks, I get a quarterly dividend. If I have some property, I can throw solar panels on it, lease it, or do something with it for revenue. With precious metals and cryptocurrencies, it is opposite. If I have them, I have to pay somehow to keep them secure, be it either a safe + insurance for physical stuff, or some type of resilient, yet secure cold wallet that is designed for long term storage, but yet, the contents are easily swept into another wallet when the need arises.
The reason stocks are a decent investment is dividends. If some blue chip stock just stays steady, every quarter, one makes money from it. One can passively sit around and do nothing and have cash roll in.
This is barring proof of stake cryptocurrencies, but those are a different beast altogether.
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The reason stocks are a decent investment is dividends.
Close but not exactly. It's more about profit than dividends. Berkshire Hathaway famously doesn't pay dividends preferring to reinvest profits, whereas paying dividends without underlying profits is almost the definition of a Ponzi scheme.
Which isn't to say I disagree that holding a blue chip stock paying regular dividends doesn't have a lot going for it. Just that dividends aren't everything.
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The problem with gold, silver and precious metals, as well as cryptocurrencies, is that they do nothing. They're dead assets. The reason you get dividends or price increases (they're equivalent) from stocks is that they're shares in an asset that actually produces something. Buying a stock is buying part of a business. Buying gold or cryptocurrency is just buying something shiny to sit on a shelf.
The exception, maybe, is Etherium's proof of stake where your staked ether is working to guarantee the integrity
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Proof of Stake is VERY useful, cuts the energy cost and waste of Etherium to almost nothing.
I'll be moving all my BTC to ETH first thing next year (I sold some earlier this year, so waiting minimizes tax impact)
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That's only useful if Etherium turns out to be useful.
70% price does entirely normal for Bitcoin (Score:2)
launched at the absolute peak of the market cycle results in massive loss.
On the positive side a 70% drop in value is entirely normal for bitcoin. After its well publicized runs up, there are less publicized drops of about 70% where it hovers for years. This has happened about four time, of course there is no guarantee it will happen again. Eventually, there is no "greater fool" with speculation based products.
Hence the true believers saying "Buyers "remained extremely loyal to the long-term thesis for bitcoin,""
I'm old enough to remember people losing big chunks of their life savings in the gold crash of the 1970s. It'll only go up, they said....
80% drop after a well publicized run up. Then it recovers and hov
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It’s gambling. A game of chance.
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There you have it. You summed it up in a single sentence. Bitcoin is for people who want rapidly time the market. Which has been shown, conclusively, numerically, oh-so-beyond-any-doubt to be the equivalent of gambling by people clearly suffering from dunning-kruger syndrome. It’s gambling. A game of chance.
Except when the 70/80% crashes are followed by long plateaus. It's the top that is harder to time. The bottom, the entry point, less so.
... ASSUMING past trends hold. In short, the advocates are waiting for a 70-80% drop and then 6-12 months of flat. Then buy and HODL for the next 10x jump up. And if they misjudged the top and only got 6x or 7x jump, is that really a failure? Again, ASSUMING past trends hold.
Yeah, it gambling, but the risk/reward is very different for top and bottom,
I think betting o
Buying opportunity! HOLD! (Score:1)
Younger adult in my family is all in on crypto. It's interesting to talk with someone who is totally wrong, completely clueless, but so self assured. He doesn't even know what he doesn't know. Mostly he repeats crypto bro noise he reads on blogs and forums.
"Just hold, it'll go back up" --- said one tulip bulb holder to his tulip bulb bros
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He is the only person I have ever heard of who has made something out of crypto.
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A guy at my work said he had mined a few dozen coins in the very early days when you could do it with a home cpu.
Said the local pub was taking crypto for beers so he burned all of them doing free rounds for everyone,
It was a few bucks each at the time and he says he's not kicking himself over it but still, ouch.
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Simpsons [youtube.com] did it [youtube.com].
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Well, he was smart. He found a bigger fool in time.
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You paint crypto fans as trumpers, and the two share far too many faults. The scariest fault they share is the detachment from reality of a thing. The 2020 vote count remains unassailable and valid. Cyrpto is not on any path toward replacing any global currency for common transactions. Both statements are absolutely true and inviolate, but that doesn't stop either faction from banging their heads against the wall. In the process, trumpers are destroying democracy, and crypto fans are destroying their own ec
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Ok, ok, I'll hold.
Hold on to my money, that is.
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Fun Fact, the 'Tulip Panic' is basically a myth.
Are currencies supposed to change value rapidly? (Score:2)
Most currencies seem to go up and down, relative to other currencies, but cryptocurrencies seem to REQUIRE large, upward value changes to "work". They do not seem to reflect the value of anything outside the currencies, other than how many dollars you can buy with them. At this moment. Subject to change in 10 minutes.
Cult indoctrination (Score:1)
Putting it out there explicitly - Crypto-Currency is y
pt barnum (Score:2)
but then again, there's no actual evidence Mr Barnum said that.... But it's appropriate for the chumps who bought into crypto....
Several times I argued with cryptobros on this very site, who tried convince me how it was just like money and a great investment.
all I have to say is
Did what it was supposed to (Score:4, Interesting)
Numbers are rough, but BTC is down say 40% over the past year, but BITO is down 70%. That delta is mostly profit for ProShares, along with Holywood accounting expenses.
This just in (Score:2)
Tulips wither and decay in Winter.
Greater fools (Score:2)
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WTF EFT? (Score:4, Insightful)
Re:WTF EFT? (Score:4, Informative)
You have to read all the way to the 11th word of the first sentence to find it! Exchange Traded Fund.
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Obviously you were not reading carefully, but the first sentence would have been better written with "the world's first exchange traded fund (ETF) tracking the price of bitcoin". You are probably used to scanning technical writing and journalism that conforms to these best practices.
So it is working exactly as it should (Score:2)