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ProShares BTC ETF (BITO) sees record outflows on crypto market dip

By Daniela Ešnerová

11:00, 13 April 2022

A chart showing market moves.
BITO, the first US-listed bitcoin ETF, was hit with record outflows in the first week of April on crypto market dip. – Photo: Shutterstock

The biggest bitcoin-linked exchange-traded fund (ETF), and the first US fund of its kind, recorded the biggest outflows ever in the first week of April, as crypto market sentiment soured.

Bitcoin (BTC) sank below $40,000 to its month-low this week, and most of the cryptocurrency market is gripped by extreme fear, according to the Crypto Fear and Greed Index. So is now a good time to enter the market?

In October 2021, US regulatory approval of ProShares Bitcoin Strategy ETF (BITO) sent BTC to its then record high, as the move by the US Securities and Exchange Commission was widely seen as evidence of institutional acceptance of bitcoin. BITO has quickly gathered $1bn (£768m) assets under management. 

But investors took $65.6m out of the fund in the first week of the April quarter reflecting a challenging year thus far for the cryptocurrency market, with over $1trn wiped out of the market in the first quarter. 

For most of Q1 2021, the total value of BTC and the cryptocurrency market was down by about a third from their all-time-highs recorded in November 2021. At the end of March, the market saw an unexpected rally with BTC rising to near its three-months-high and approaching $48,000, but the run has proved to be a dead-cat bounce, with the market quickly retreating. 

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ProShares Bitcoin Strategy ETF (BITO) price chart

HODLers own record amount of BTC

Since then, short-term holders have given up on the market. Traders holding their coins for less than a month reduced their position by 20% to 1.6m from 29 March to 12 April, while long-term holders have been accumulating constantly since the beginning of November, data from IntoTheBlock show

BTC/USD

63,859.00 Price
-1.030% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

DOGE/USD

0.12 Price
-2.990% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

XRP/USD

0.58 Price
-8.930% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.01168

BCH/USD

383.85 Price
+1.520% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.50

HODLers now own a record 12.12 BTC, according to IntoTheBlock's data.

”Panic-sellers are feeding the whales who are viewing the current bitcoin price dips as discounts,” founder and chief executive of deVere Group Nigel Green said. Others have warned about more diffuculties ahead, and the market getting worse before it gets better:

Head-to-head:  

BTC to $30,000 by the end of Q2

Arthur Haynes, co-founder of BitMEX wrote in a blogpost on Monday:

”By the end of the second quarter in June of this year, I believe bitcoin and ether will have tested these levels: Bitcoin: $30,000. Ether: $2,500.”

BTC to $75,000 by the end of 2022

Founder and chief executive of deVere Group Nigel Green:

”If anything, the case for bitcoin and cryptocurrencies is becoming stronger. Therefore, we expect bitcoin will recover from the current crypto crash to hit a fresh all-time high of $75,000 by the end of 2022.”

 

Markets in this article

BTC/USD
Bitcoin / USD
63859.00 USD
-666.3 -1.030%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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