- The ProShares Bitcoin Strategy is seeing its biggest monthly outflows of the year.
- Grayscale Bitcoin Trust (GBTC) has seen its assets drop to over $15 billion.
- There is risk for more outflows as Bitcoin price slips.
The ProShares Bitcoin Strategy ETF (BITO) is seeing its biggest monthly outflows this month as demand for cryptocurrencies eases. The fund, which tracks Bitcoin futures, has suffered as Bitcoin price has plunged by more than $6,000 from its highest level this year. BITO stock price has crashed from the year-to-date high of $16.71 to below $13.
Further, data by The Block shows that the popular Grayscale Bitcoin Trust (GBTC) is also seeing higher outflows. It now has over $15.6 billion in assets, down from the year-to-date high of over $20 billion.
BITO outflows rise
The ProShares Bitcoin Strategy ETF is the second most popular approach to invest in Bitcoin after the Grayscale Bitcoin Trust (GBTC). The fund has more than $914 million in assets, down from the year-to-date high of over $1.2 billion. It has an expense ratio of 0.95%, which is a bit higher than other popular ETFs like Invesco QQQ and SPDR S&P 500 Trust.
BITO ETF saw huge inflows this year as Bitcoin price jumped. Data compiled by ETF.com shows that its inflows peaked at over $156 million in July. Recently, however, the fund has seen outflows as demand for Bitcoin has eased. Its outflows came in at over $9.6 million in August. Month-to-date, BITO has had over $28.4 million in outflows, higher than the $21.9 million it saw in February.
In all, the ProShares Bitcoin Strategy ETF has had over $287 million in inflows this year. These inflows happened since Bitcoin has risen by more than 50% this year despite the recent pullback.
Bitcoin price risks remain
The biggest risk for BITO is that Bitcoin price has moved to a bear market and the situation could get dire soon. For example, the coin has formed a death cross, as I wrote here. This pattern happens when the 50-day and 200-day moving averages make a crossover.
Bitcoin has also formed a head and shoulders pattern, which is one of the most bearish patterns in the market. Therefore, technicals suggest that Bitcoin price will drop to $20,000 in the near term.
Fundamentals are also not supportive. As I wrote earlier, fiat money supply has dropped while inflation trends are worrying. Therefore, there is a likelihood that more Bitcoin weakness will happen.
If this happens, BITO ETF will likely continue seeing outflows as investors move money to better-performing assets. For example, some risk averse investors are moving back to cash by investing in money market funds, which are yielding over 5%.
