Bitcoin's Stabilization at $66,800 Weighs on BITO Performance

The ProShares Bitcoin Strategy ETF (BITO) has been struggling to regain traction since the launch of spot Bitcoin ETFs from major players like BlackRock and Fidelity in January 2024. Despite a brief bounce after Bitcoin stabilized near $66,800, BITO's price action remains cautious, reflecting ongoing outflows due to its high expense ratio compared to spot competitors.

The fund's futures-based structure creates recurring costs not faced by spot ETF holders, including contango drag. As BITO continues to lose assets under management (AUM), the impact of these costs will only worsen. Investors should monitor AUM trends and fact sheet updates for shifts in roll cost and trading efficiency.

A key driver of BITO's performance over the next 12 months is the interplay between institutional risk appetite and regulatory environment. While the current administration has taken a crypto-friendly stance, broader risk sentiment remains subdued, and the VIX has climbed to 19.55, up roughly 20% over the past month. Prediction markets capture this split sentiment, with a 38.5% probability assigned to Bitcoin reaching $100,000 by year-end.