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ProShares Bitcoin ETF Sees Over 70% Trading Decline Amidst Growing Popularity of Spot Bitcoin ETFs

The ProShares Bitcoin Strategy ETF (BITO) has witnessed a substantial drop in trading activity, experiencing over a 70% decline since the launch of spot Bitcoin ETFs. On January 18, trading volumes for BITO on the New York Stock Exchange fell sharply to just above $500 million, marking a significant decrease from the peak of $2 billion observed on January 11, according to data from Coinbase. Simultaneously, ETF.com reported a substantial outflow from BITO, exceeding $270 million within the same timeframe.

Despite the downturn in trading activity, market analysts maintain an optimistic view of BITO’s role in the cryptocurrency sector, especially as a hedging tool. However, investors seem to be favoring spot Bitcoin ETFs over futures-based options like BITO. This preference is attributed to the inherent mechanism of BITO, which involves rolling over futures contracts, incurring additional costs that can impact its long-term performance.

In contrast to the declining performance of BITO, the first week following the launch of 11 spot Bitcoin ETFs showcased impressive results. These spot ETFs generated a remarkable $14 billion in trading volume, surpassing the total for all ETFs launched in 2023. Additionally, these spot ETFs collectively attracted over $1.2 billion in investments during their inaugural week, underscoring their increasing popularity among investors.

The current landscape positions Bitcoin as the second-largest ETF market in the U.S., based on assets under management, surpassing silver. The evolving dynamics in the ETF space reflect the shifting preferences of investors and the growing significance of spot Bitcoin ETFs in the cryptocurrency investment landscape.

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