Strong inflows to funds traded on the ProShares Bitcoin Strategy (BITO) exchange over the past two weeks have pushed Bitcoin (BTC) affordability to a new record.
No Bitcoin Outflow Despite ‘Rollover’ Risks
The fund, which uses futures contracts to gauge bitcoin price movements, had a record 28,450 bitcoins under management — worth about $1.27 billion at current prices — as of March 24, up from almost 26,000 bitcoins the previous month. according to officials. Pro Shares data.
ProShares Bitcoin ETF wallet as of March 24, 2022 Source: Official website
Interestingly, the flow appeared a few days before the “rollover” of 3846 March BITO futures contracts in the week ending March 25th.
To sum it up, rollover involves traders moving their futures contract as the expiration date of the long-term contract approaches in order to maintain the same position.
BITO trading periods typically follow an increase in net Bitcoin outflows, Arcane Research notes in its latest report, citing the recent cycle period due to market uncertainty caused by the conflict between Russia and Ukraine.
ProShares BITO AUM. Source: Secret Research.
But on March 21, 225 BTC also entered the vaults, and by April, BITO had launched its 437 March contracts. This led to Arcane noticing increased institutional demand for the fund. In her report, she wrote:
“The strong inflow of BITO indicates that the appetite for bitcoin through traditional investment vehicles is growing.”
According to additional data provided by Glassnode, BITO saw a stable net flow through the end of this week.
Purpose of moving bitcoin-ETF. Source: glassnode
Bitcoin to $50k next month?
The flow of the ProShares Bitcoin ETF coincided with the rally in the BTC spot market on March 25th.
Daily BTC/USD price chart. Source: Trading View
On March 25, the price of bitcoin surged another 2.5% to over $45,000, the highest level in more than three weeks. Alexander Mamasedikov, co-founder of cryptocurrency wallet service MinePlex, indicated that the price of BTC could jump to $50,000 after this.
“The notable rise in the ProShares BTC ETF to a new all-time high of 28,000 BTC is evidence that demand for the Bitcoin ETF product is underpinned by robust demand,” he told Cointelegraph, adding:
“This positive price action has weighed on Bitcoin so far, and continued accumulation or investment by both private and institutional investors is poised to push the coin to form strong support above $50,000 by mid-April.”
Don’t like shades of gray?
Interestingly, institutions have chosen ProShares Bitcoin EFT over their rival Grayscale Bitcoin Trust (GBTC), a fund traded at a 25% discount to discover BTC.
Grayscale output for NAV map. Source: YCharts
The problem with choosing GBTC over BITO is that the discount continues to rise, meaning that investors will be at risk of falling short of bitcoin spot with a much higher interest rate than BITO, which is trading 2% below current BTC prices. . .
However, there is still a small chance that GBTC will be the winner. Specifically, Grayscale Investments, a New York-based investment firm that backs the GBTC, has expressed interest in converting the trust into a bitcoin-backed instant ETF. If that happens, the 25% GBTC rebate should go back to zero.
BTC investment portfolio in grayscale. Source: Coinglass
“Buying BITO shares ensures that you fall behind bitcoin,” said Ryan Wild, a seasoned financial analyst, in an analysis published in February, adding:
“Buying GBTC shares will likely result in a similar or worse underperformance compared to BITO, with very little chance of significant returns if GBTC is converted to a spot ETF.”