While much of the rest of the market is eagerly anticipating the Federal Reserve’s signaled rate cuts, one sector is more hesitant than most.
Certain analysts are predicting that Bitcoin prices may fall as much as 20% in response to the rate cuts. Coupled with September being a traditionally rough month for the cryptocurrency, the future of Bitcoin may look rocky to its skeptics.
However, I believe this view of Bitcoin’s future is ultimately shortsighted. Cryptocurrency is still going strong, and this dip should be treated less as a fall from grace, and more as an opportunity for a great investment.
The real question is: how should we best invest in Bitcoin’s future? I think the answer lies in Bitcoin futures — more specifically, the ProShares Bitcoin Strategy ETF (BITO).
Issued in 2021 by ProShares Advisors LLC, BITO provides exposure to Bitcoin returns in the form of an ETF. Instead of directly investing in Bitcoin, the fund manages a portfolio of cash settled, front-month Bitcoin futures.
The value of these futures is determined by the CME Group and Crypto Facilities Bitcoin Reference Rate. Their value is found by aggregating Bitcoin trading activity across major global Bitcoin spot trading venues during a one-hour window and dividing those windows into 12 five-minute segments. Each segment has a volume-weighted median (VWM), and the value is expressed as the mean of those 12 VWMs.
BITO’s Bitcoin futures are held through two relatively equally represented means: The U.S. Dollar (50.94%) and United States Treasury Bills (49.06%). The fund has a current expense ratio of 0.95% and has $1.74 billion in assets under management.
Chart Courtesy of www.stockcharts.com
As of Sept. 2, the fund is down 6.63% in the past month and 15.02% in the past three months. However, the fund is also up 31.33% year to date and an astonishing 109.83% in the past year. This shows the true long-term viability of the crypto market despite temporary setbacks.
While the future of Bitcoin continues to shine, it may not be right for your own financial future. You should always consider your investment goals and do your due diligence before adding any stock or exchange-traded fund (ETF) to your portfolio
As always, I’m happy to answer any of your questions about ETFs, so do not hesitate to email me. You may see your question answered in a future ETF Talk.
